Contrasting Diodes (DIOD) and Ambarella (AMBA)

Diodes (NASDAQ: DIOD) and Ambarella (NASDAQ:AMBA) are both small-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, risk, earnings, valuation and institutional ownership.

Earnings and Valuation

This table compares Diodes and Ambarella’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Diodes $942.16 million 1.49 $15.93 million $0.60 47.47
Ambarella $310.30 million 6.22 $57.81 million $1.04 55.90

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

Insider & Institutional Ownership

74.7% of Diodes shares are held by institutional investors. Comparatively, 63.2% of Ambarella shares are held by institutional investors. 7.0% of Diodes shares are held by company insiders. Comparatively, 5.8% of Ambarella shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Diodes and Ambarella, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Diodes 1 3 1 0 2.00
Ambarella 0 6 6 0 2.50

Diodes presently has a consensus target price of $34.50, suggesting a potential upside of 21.14%. Ambarella has a consensus target price of $58.33, suggesting a potential upside of 0.33%. Given Diodes’ higher probable upside, equities research analysts clearly believe Diodes is more favorable than Ambarella.

Profitability

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

Net Margins Return on Equity Return on Assets
Diodes 2.96% 6.44% 3.57%
Ambarella 11.51% 7.92% 7.03%

Risk and Volatility

Diodes has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, Ambarella has a beta of 1.57, meaning that its stock price is 57% more volatile than the S&P 500.

Summary

Ambarella beats Diodes on 10 of the 14 factors compared between the two stocks.

About Diodes

Diodes Incorporated is a manufacturer and supplier of application-specific standard products within the discrete, logic, analog and mixed-signal semiconductor markets, serving the consumer electronics, computing, communications, industrial and automotive markets. The Company’s products include diodes; rectifiers; transistors; metal-oxide semiconductor field-effect transistors (MOSFETs); protection devices; amplifiers and comparators; Hall-effect and temperature sensors, and power management devices, including light emitting diode (LED) drivers, alternating current (AC)-direct current (DC) and DC-DC switching, linear voltage regulators and voltage references, along with special function devices, such as universal serial bus (USB) power switches, load switches, voltage supervisors and motor controllers. It also holds interests in Pericom Semiconductor Corporation, which designs, develops and markets integrated circuits (ICs) and frequency control products (FCPs).

About Ambarella

Ambarella, Inc. offers semiconductor processing solutions for video that enable high-definition (HD), video capture, sharing and display. The Company operates through the development and sale of low-power, high-definition video products segment. Its system-on-a-chip designs incorporate HD video processing, image processing, audio processing and system functions onto a single chip. In the camera market, its platform enables the creation of video content in wearable cameras, automotive aftermarket cameras, professional and consumer Internet Protocol (IP), security cameras, telepresence cameras and unmanned aerial vehicles. In the infrastructure market, its solutions manage IP video traffic, broadcast encoding and transcoding, and IP video delivery applications. AmbaClear is its image signal processing architecture. AmbaCast is its HD video processing architecture. It offers the MotorVu 3D 360 degrees Surround View reference design for automotive original equipment manufacturer market.

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