Comparing Advanced Energy Industries (AEIS) & Texas Instruments (NASDAQ:TXN)

Advanced Energy Industries (NASDAQ: AEIS) and Texas Instruments (NASDAQ:TXN) are both mid-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Dividends

Texas Instruments pays an annual dividend of $2.00 per share and has a dividend yield of 2.1%. Advanced Energy Industries does not pay a dividend. Texas Instruments pays out 46.7% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Advanced Energy Industries and Texas Instruments’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Advanced Energy Industries $577.12 million 6.52 $172.08 million $3.94 23.92
Texas Instruments $14.18 billion 6.81 $6.28 billion $4.28 22.78

Texas Instruments has higher revenue and earnings than Advanced Energy Industries. Texas Instruments is trading at a lower price-to-earnings ratio than Advanced Energy Industries, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

91.5% of Advanced Energy Industries shares are owned by institutional investors. Comparatively, 83.6% of Texas Instruments shares are owned by institutional investors. 1.1% of Advanced Energy Industries shares are owned by company insiders. Comparatively, 1.0% of Texas Instruments shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for Advanced Energy Industries and Texas Instruments, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Advanced Energy Industries 0 3 2 0 2.40
Texas Instruments 1 15 12 0 2.39

Advanced Energy Industries currently has a consensus price target of $72.00, indicating a potential downside of 23.61%. Texas Instruments has a consensus price target of $93.58, indicating a potential downside of 4.02%. Given Texas Instruments’ higher possible upside, analysts plainly believe Texas Instruments is more favorable than Advanced Energy Industries.

Risk and Volatility

Advanced Energy Industries has a beta of 1.38, suggesting that its share price is 38% more volatile than the S&P 500. Comparatively, Texas Instruments has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500.

Profitability

This table compares Advanced Energy Industries and Texas Instruments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Advanced Energy Industries 27.42% 36.19% 25.13%
Texas Instruments 29.98% 38.88% 25.30%

Summary

Texas Instruments beats Advanced Energy Industries on 10 of the 16 factors compared between the two stocks.

About Advanced Energy Industries

Advanced Energy Industries, Inc. is a provider of engineered, precision power conversion, measurement and control solutions. The Company is engaged in designing, manufacturing, selling and supporting its power conversion products and solutions that transform power into various forms in various applications ranging from manufacturing and industrial processes to instrumentation, and test and measurement. It also provides repair and maintenance services for all of its products. Its process power systems include direct current (DC), pulsed DC, low frequency, high voltage, and radio frequency (RF) power supplies, matching networks, remote plasma sources for reactive gas applications and RF instrumentation. These power conversion systems refine, modify and control the raw electrical power from a utility and convert it into power that may be customized and is predictable and repeatable. Its power control modules and thermal instrumentation products are used in the semiconductor industry.

About Texas Instruments

Texas Instruments Incorporated designs, makes and sells semiconductors to electronics designers and manufacturers across the world. The Company operates through two segments: Analog and Embedded Processing. As of December 31, 2016, the Company had design, manufacturing or sales operations in more than 30 countries. The Company’s Analog segment’s product line includes High Volume Analog & Logic (HVAL), Power Management (Power), High Performance Analog (HPA) and Silicon Valley Analog (SVA). HVAL products support applications, such as automotive safety devices, touchscreen controllers, low-voltage motor drivers and integrated motor controllers. The Company’s Embedded Processing segment’s product line includes Processor, Microcontrollers and Connectivity. Processor products include digital signal processors (DSPs) and applications processors. DSPs perform mathematical computations to process digital data.

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