Critical Analysis: POET Technologies (NASDAQ:POET) versus Semtech (NASDAQ:SMTC)

Semtech (NASDAQ:SMTC) and POET Technologies (NASDAQ:POET) are both technology companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Valuation and Earnings

This table compares Semtech and POET Technologies”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Semtech	$1.05 billion	11.01	-$40.38 million	($0.39)	-318.18
POET Technologies	$1.08 million	1,172.95	-$62.96 million	($0.58)	-14.22

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

Institutional and Insider Ownership

2.0% of POET Technologies shares are held by institutional investors. 0.4% of Semtech shares are held by company insiders. Comparatively, 0.5% of POET Technologies shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Semtech and POET Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Semtech	-3.05%	18.31%	7.25%
POET Technologies	-4,423.13%	-11.65%	-10.12%

Volatility & Risk

Semtech has a beta of 2.35, indicating that its stock price is 135% more volatile than the S&P 500. Comparatively, POET Technologies has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Semtech and POET Technologies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Semtech	1	3	14	1	2.79
POET Technologies	1	0	0	0	1.00

Semtech currently has a consensus target price of $189.47, suggesting a potential upside of 52.69%. POET Technologies has a consensus target price of $8.00, suggesting a potential downside of 3.03%. Given Semtech’s stronger consensus rating and higher possible upside, equities analysts plainly believe Semtech is more favorable than POET Technologies.

Summary

Semtech beats POET Technologies on 11 of the 15 factors compared between the two stocks.

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.

About POET Technologies

POET Technologies Inc. designs, develops, manufactures, and sells discrete and integrated opto-electronic solutions in Canada, the United States, Singapore, and China. It offers integration solutions based on the POET Optical Interposer, a novel platform that allows the seamless integration of electronic and photonic devices into a single multi-chip module using advanced wafer-level semiconductor manufacturing techniques. It also develops photonic integrated components. The company serves the data center, telecommunications, Internet of things and industrial sensing, automotive LIDAR, optical coherence tomography for medical devices, and virtual reality systems markets. The company was formerly known as Opel Technologies Inc. and changed its name to POET Technologies Inc. in June 2013. POET Technologies Inc. was incorporated in 1972 and is headquartered in Toronto, Canada.