Semtech (NASDAQ:SMTC) vs. Qualcomm (NASDAQ:QCOM) Critical Analysis

Qualcomm (NASDAQ:QCOM) and Semtech (NASDAQ:SMTC) are both large-cap technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Insider and Institutional Ownership

74.3% of Qualcomm shares are held by institutional investors. 0.1% of Qualcomm shares are held by insiders. Comparatively, 0.4% of Semtech shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for Qualcomm and Semtech, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Qualcomm	2	20	14	2	2.42
Semtech	1	3	13	1	2.78

Qualcomm currently has a consensus target price of $203.63, indicating a potential upside of 24.87%. Semtech has a consensus target price of $189.07, indicating a potential upside of 35.05%. Given Semtech’s stronger consensus rating and higher probable upside, analysts clearly believe Semtech is more favorable than Qualcomm.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Qualcomm	21.01%	38.36%	17.48%
Semtech	-3.05%	18.31%	7.25%

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Qualcomm	$44.28 billion	3.87	$5.54 billion	$8.64	18.87
Semtech	$1.05 billion	12.42	-$40.38 million	($0.39)	-358.97

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

Risk and Volatility

Qualcomm has a beta of 1.65, meaning that its share price is 65% more volatile than the S&P 500. Comparatively, Semtech has a beta of 2.35, meaning that its share price is 135% more volatile than the S&P 500.

Summary

Qualcomm beats Semtech on 10 of the 15 factors compared between the two stocks.

About Qualcomm

Qualcomm Incorporated engages in the development and commercialization of foundational technologies for the wireless industry worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies for use in wireless voice and data communications, networking, computing, multimedia, and position location products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of wireless products comprising products implementing CDMA2000, WCDMA, LTE and/or OFDMA-based 5G standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including 5G, artificial intelligence, automotive, consumer, enterprise, cloud, IoT, and extended reality, and investments, including non-marketable equity securities and, to a lesser extent, marketable equity securities, and convertible debt instruments. It also provides development, and other services and related products to the United States government agencies and their contractors. The company was incorporated in 1985 and is headquartered in San Diego, 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.