Analyzing Advanced Energy Industries (AEIS) and Mellanox Technologies (NASDAQ:MLNX)

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

Valuation & Earnings

This table compares Advanced Energy Industries and Mellanox Technologies’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Advanced Energy Industries $483.70 million 6.86 $127.45 million $5.27 15.87
Mellanox Technologies $857.50 million 2.92 $18.51 million ($0.16) -306.88

Advanced Energy Industries has higher revenue, but lower earnings than Mellanox Technologies. Mellanox Technologies 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.

Analyst Ratings

This is a summary of current ratings and price targets for Advanced Energy Industries and Mellanox Technologies, 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
Mellanox Technologies 2 6 3 0 2.09

Advanced Energy Industries currently has a consensus target price of $78.75, suggesting a potential downside of 5.87%. Mellanox Technologies has a consensus target price of $51.00, suggesting a potential upside of 3.87%. Given Mellanox Technologies’ higher possible upside, analysts plainly believe Mellanox Technologies is more favorable than Advanced Energy Industries.

Profitability

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

Net Margins Return on Equity Return on Assets
Advanced Energy Industries 33.76% 35.56% 25.61%
Mellanox Technologies -0.92% 4.76% 3.24%

Risk & Volatility

Advanced Energy Industries has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500. Comparatively, Mellanox Technologies has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Institutional & Insider Ownership

94.2% of Advanced Energy Industries shares are held by institutional investors. Comparatively, 62.1% of Mellanox Technologies shares are held by institutional investors. 1.1% of Advanced Energy Industries shares are held by insiders. Comparatively, 6.1% of Mellanox Technologies shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Advanced Energy Industries beats Mellanox Technologies on 9 of the 14 factors compared between the two stocks.

Advanced Energy Industries Company Profile

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.

Mellanox Technologies Company Profile

Mellanox Technologies, Ltd. is a fabless semiconductor company. The Company is an integrated supplier of interconnect products and solutions based on the InfiniBand and Ethernet standards. The Company operates in the development, manufacturing, marketing and sales of interconnect products segment. Its products facilitate data transmission between servers, storage systems, communications infrastructure equipment and other embedded systems. It operates its business globally and offers products to customers at various levels of integration. The products it offers include integrated circuits (ICs), adapter cards, switch systems, multi-core and network processors, cables, modules, software, services and accessories. Together these products form a networking solution, focused on computing, storage and communication applications used in multiple markets, including high-performance computing (HPC), cloud, Web 2.0, storage, financial services, and enterprise data center (EDC).

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