Critical Analysis: Pixelworks (NASDAQ:PXLW) versus Pagaya Technologies (NASDAQ:PGY)

Pagaya Technologies (NASDAQ:PGY) and Pixelworks (NASDAQ:PXLW) are both small-cap technology companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.

Institutional & Insider Ownership

57.1% of Pagaya Technologies shares are owned by institutional investors. Comparatively, 21.4% of Pixelworks shares are owned by institutional investors. 42.0% of Pagaya Technologies shares are owned by insiders. Comparatively, 4.7% of Pixelworks shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Pagaya Technologies and Pixelworks, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pagaya Technologies	0	2	8	2	3.00
Pixelworks	1	0	1	0	2.00

Pagaya Technologies currently has a consensus target price of $31.12, indicating a potential upside of 63.30%. Pixelworks has a consensus target price of $12.00, indicating a potential upside of 115.05%. Given Pixelworks’ higher probable upside, analysts clearly believe Pixelworks is more favorable than Pagaya Technologies.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pagaya Technologies	$1.33 billion	1.20	$81.39 million	$1.36	14.01
Pixelworks	$1.04 million	32.33	-$22.50 million	($1.63)	-3.42

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

Volatility and Risk

Pagaya Technologies has a beta of 5.5, suggesting that its share price is 450% more volatile than the S&P 500. Comparatively, Pixelworks has a beta of 1.38, suggesting that its share price is 38% more volatile than the S&P 500.

Profitability

This table compares Pagaya Technologies and Pixelworks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pagaya Technologies	9.12%	51.56%	19.01%
Pixelworks	N/A	-28.77%	-14.64%

Summary

Pagaya Technologies beats Pixelworks on 13 of the 15 factors compared between the two stocks.

About Pagaya Technologies

Pagaya Technologies Ltd., a product-focused technology company, deploys data science and proprietary artificial intelligence-powered technology for financial institutions and investors in the United States, Israel, the Cayman Islands, and internationally. The company develops and implements proprietary artificial intelligence technology and related software solutions to assist partners to originate loans and other assets. Its partners include high-growth financial technology companies, incumbent banks and financial institutions, auto finance providers, and residential real estate service providers. Pagaya Technologies Ltd. was incorporated in 2016 and is headquartered in New York, New York.

About Pixelworks

Pixelworks, Inc., together with its subsidiaries, develops and markets semiconductor and software solutions for mobile, home and enterprise, and cinema markets in the United States, Japan, China, Taiwan, Korea, and Europe. The company offers imageprocessor integrated circuits, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing within high-end display systems; visual processor integrated circuits that works with a mobile application processor; and transcoder integrated circuits which includes software that control the operations and signal processing for converting multiple bitrates, resolutions and codecs to provide bandwidth efficient video transmissions based on industry standard protocols. It also provides software and platform licensing products comprising Pixelworks Pro Software, a software that enables development and customize the look and feel of mobile products by use of various features, such as absolute color accuracy, HDR tone mapping, SDR-to-HDR conversion, and others; and TrueCut Motion Platform, content creation tool which provides the ability to dial in a motion look on a shot-by-shot basis. The company distributes its products to integrators, branded manufacturers, and branded suppliers. Pixelworks, Inc. was founded in 1997 and is based in Portland, Oregon.