Contrasting Ambarella (NASDAQ:AMBA) and Semtech (NASDAQ:SMTC)

Ambarella (NASDAQ:AMBA) and Semtech (NASDAQ:SMTC) are both mid-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, risk, profitability, valuation, dividends, institutional ownership and analyst recommendations.

Insider & Institutional Ownership

82.1% of Ambarella shares are held by institutional investors. 5.7% of Ambarella shares are held by insiders. Comparatively, 0.6% of Semtech shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Ambarella and Semtech’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ambarella	-79.46%	-26.01%	-22.28%
Semtech	-107.21%	-154.99%	-2.40%

Earnings & Valuation

This table compares Ambarella and Semtech”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ambarella	$220.41 million	11.01	-$169.42 million	($4.26)	-13.90
Semtech	$815.31 million	4.32	-$1.09 billion	($13.55)	-3.46

Ambarella has higher earnings, but lower revenue than Semtech. Ambarella is trading at a lower price-to-earnings ratio than Semtech, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Ambarella has a beta of 1.62, suggesting that its share price is 62% more volatile than the S&P 500. Comparatively, Semtech has a beta of 1.54, suggesting that its share price is 54% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Ambarella and Semtech, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ambarella	1	3	7	0	2.55
Semtech	0	2	10	0	2.83

Ambarella presently has a consensus price target of $74.09, indicating a potential upside of 25.11%. Semtech has a consensus price target of $52.60, indicating a potential upside of 12.30%. Given Ambarella’s higher probable upside, equities research analysts plainly believe Ambarella is more favorable than Semtech.

Summary

Ambarella beats Semtech on 9 of the 14 factors compared between the two stocks.

About Ambarella

Ambarella, Inc. develops semiconductor solutions that enable high-definition (HD) and ultra HD compression, image signal processing, and artificial intelligence processing worldwide. The company's system-on-a-chip designs integrated HD video processing, image processing, artificial intelligence computer vision algorithms, audio processing, and system functions onto a single chip for delivering video and image quality, differentiated functionality, and low power consumption. Its solutions are used in automotive cameras, such as automotive video recorders, electronic mirrors, front advanced driver assistance system camera, cabin monitoring system and driver monitoring system camera, and central domain controllers for autonomous vehicle; enterprise and public class, and home security camera; and robotics and industrial application, including identification/authentication cameras, robotic products, and sensing cameras, as well as cameras for the enterprise, home, public spaces, and consumer leisure comprising wearable body cameras, sports action cameras, social media cameras, drones for capturing aerial video or photographs, video conferencing, and virtual reality applications. The company sells its solutions to original design manufacturers and original equipment manufacturers through its direct sales force and distributors. Ambarella, Inc. was incorporated in 2004 and is headquartered in Santa Clara, California.

About Semtech

Semtech Corporation designs, develops, manufactures, and markets analog and mixed-signal semiconductor and advanced algorithms. It provides signal integrity products, including a portfolio of optical data communications and video transport products used in various infrastructure, and industrial applications; a portfolio of integrated circuits for data centers, enterprise networks, passive optical networks, wireless base station optical transceivers, and high-speed interface applications; and video products for broadcast applications, as well as video-over-IP technology for professional audio video applications. The company offers protection products, such as filter and termination devices that are integrated with the transient voltage suppressor devices, which protect electronic systems from voltage spikes; and sensing products comprising a portfolio of specialized radio frequency products used in various industrial, medical, and communications applications, as well as specialized sensing products. In addition, it provides switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging related products. Further, it offers portfolio of IoT solutions, such as modules, gateways, routers, and connected services; and portfolio of connected services, including wireless connectivity and cloud-based services for industrial, medical and communications applications. The company serves original equipment manufacturers and industrial end-markets. It sells its products directly, as well as through independent sales representative firms and independent distributors in Asia- Pacific, North America, and Europe. Semtech Corporation was incorporated in 1960 and is headquartered in Camarillo, California.