Contrasting STMicroelectronics (NYSE:STM) and Tower Semiconductor (NASDAQ:TSEM)

Tower Semiconductor (NASDAQ:TSEM) and STMicroelectronics (NYSE:STM) are both large-cap technology companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, dividends, risk, analyst recommendations, valuation and institutional ownership.

Valuation & Earnings

This table compares Tower Semiconductor and STMicroelectronics”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tower Semiconductor	$1.57 billion	10.68	$220.47 million	$3.11	47.85
STMicroelectronics	$11.80 billion	3.47	$166.00 million	$0.56	81.31

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

Profitability

This table compares Tower Semiconductor and STMicroelectronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tower Semiconductor	19.36%	11.72%	9.62%
STMicroelectronics	3.80%	4.71%	3.31%

Volatility and Risk

Tower Semiconductor has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, STMicroelectronics has a beta of 2, indicating that its share price is 100% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Tower Semiconductor and STMicroelectronics, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tower Semiconductor	0	2	7	1	2.90
STMicroelectronics	0	6	13	0	2.68

Tower Semiconductor currently has a consensus price target of $297.12, suggesting a potential upside of 99.68%. STMicroelectronics has a consensus price target of $75.06, suggesting a potential upside of 64.84%. Given Tower Semiconductor’s stronger consensus rating and higher probable upside, equities analysts plainly believe Tower Semiconductor is more favorable than STMicroelectronics.

Institutional & Insider Ownership

70.5% of Tower Semiconductor shares are held by institutional investors. Comparatively, 5.0% of STMicroelectronics shares are held by institutional investors. 1.0% of Tower Semiconductor shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Tower Semiconductor beats STMicroelectronics on 11 of the 15 factors compared between the two stocks.

About Tower Semiconductor

Tower Semiconductor Ltd., an independent semiconductor foundry, focus on specialty process technologies to manufacture analog intensive mixed-signal semiconductor devices in Israel, the United States, Japan, Europe, and internationally. It provides various customizable process technologies, including SiGe, BiCMOS, mixed signal/CMOS, RF CMOS, CMOS image sensor, integrated power management, and MEMS. The Company also provides design enablement platform for quick and accurate design cycle, as well as transfer optimization and development process services to integrated device manufacturers and fabless companies. It serves various markets, such as consumer electronics, personal computers, communications, automotive, industrial, aerospace, military, and medical device products. The company was incorporated in 1993 and is headquartered in Migdal Haemek, Israel.

About STMicroelectronics

STMicroelectronics N.V., together with its subsidiaries, designs, develops, manufactures, and sells semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The Automotive and Discrete Group segment offers automotive integrated circuits (ICs), and discrete and power transistor products. The Analog, MEMS and Sensors Group segment provides industrial application-specific integrated circuits (ASICs) and application-specific standard products (ASSPs); general purpose analog products; custom analog ICs; wireless charging solutions; galvanic isolated gate drivers; low and high voltage amplifiers, comparators, and current-sense amplifiers; MasterGaN, a solution that integrates a silicon driver and GaN power transistors in a single package; wireline and wireless connectivity ICs; touch screen controllers; micro-electro-mechanical systems (MEMS) products, including sensors or actuators; and optical sensing solutions. The Microcontrollers and Digital ICs Group segment offers general purpose and secure microcontrollers; and radio frequency (RF) products. It also offers application-specific standard products for analog, digital and mixed-signal applications. In addition, the company provides assembly and other services. It sells its products through distributors and retailers, as well as through sales representatives. The company serves automotive, industrial, personal electronics and communications equipment, and computers and peripherals markets. STMicroelectronics N.V. was incorporated in 1987 and is headquartered in Geneva, Switzerland.