Head to Head Review: United Microelectronics (UMC) & Silicon Motion Technology (SIMO)

Silicon Motion Technology (NASDAQ: SIMO) and United Microelectronics (NYSE:UMC) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, profitability, risk, earnings, valuation and institutional ownership.

Risk & Volatility

Silicon Motion Technology has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500. Comparatively, United Microelectronics has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Silicon Motion Technology and United Microelectronics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Silicon Motion Technology 0 2 11 0 2.85
United Microelectronics 8 0 0 0 1.00

Silicon Motion Technology currently has a consensus price target of $57.67, suggesting a potential upside of 8.23%. United Microelectronics has a consensus price target of $2.10, suggesting a potential downside of 14.63%. Given Silicon Motion Technology’s stronger consensus rating and higher possible upside, equities analysts clearly believe Silicon Motion Technology is more favorable than United Microelectronics.

Institutional and Insider Ownership

82.8% of Silicon Motion Technology shares are owned by institutional investors. Comparatively, 5.8% of United Microelectronics shares are owned by institutional investors. 8.0% of United Microelectronics 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.

Profitability

This table compares Silicon Motion Technology and United Microelectronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Silicon Motion Technology 17.18% 19.58% 14.98%
United Microelectronics 6.90% 4.84% 2.71%

Dividends

Silicon Motion Technology pays an annual dividend of $0.89 per share and has a dividend yield of 1.7%. United Microelectronics pays an annual dividend of $0.06 per share and has a dividend yield of 2.4%. Silicon Motion Technology pays out 35.0% of its earnings in the form of a dividend. United Microelectronics pays out 42.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Valuation and Earnings

This table compares Silicon Motion Technology and United Microelectronics’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Silicon Motion Technology $556.15 million 3.38 $110.94 million $2.54 20.98
United Microelectronics $4.59 billion 1.31 $266.08 million $0.14 17.57

United Microelectronics has higher revenue and earnings than Silicon Motion Technology. United Microelectronics is trading at a lower price-to-earnings ratio than Silicon Motion Technology, indicating that it is currently the more affordable of the two stocks.

Summary

Silicon Motion Technology beats United Microelectronics on 12 of the 16 factors compared between the two stocks.

Silicon Motion Technology Company Profile

Silicon Motion Technology Corporation is a fabless semiconductor company. The Company designs, develops and markets low-power semiconductor solutions to original equipment manufacturers (OEMs) and other customers in the mobile storage and mobile communications markets. It is engaged in developing negative-AND (NAND) flash controller integrated circuits (ICs) for solid-state storage devices and specialty radio frequency (RF) ICs for mobile devices. In the mobile storage market, the Company’s products are controllers used in embedded storage products, such as Solid State Drives (SSDs), and Embedded Multimedia Cards (eMMCs), as well as expandable storage products, such as flash memory cards and universal serial bus (USB) flash drives. For the mobile communications market, the Company’s products are handset transceivers and mobile television (TV) System on Chips (SoCs). The Company’s products are used in devices, such as smartphones, tablets and personal computers (PCs).

United Microelectronics Company Profile

United Microelectronics Corporation is a global semiconductor foundry. The Company provides integrated circuit (IC) production for applications spanning every sector of the electronics industry. The Company operates through two segments: wafer fabrication and new business. The primary operating activity of the Company’s wafer fabrication segment is the manufacture of chips to the design specifications of its customers by using its own processes and techniques. The new business segment primarily includes researching, developing, manufacturing, and providing solar energy and new generation light-emitting diode (LED). The Company maintains a customer base across various industries, including communication, consumer electronics, computer, memory and others, while focusing on manufacturing for applications, including networking, telecommunications, Internet, multimedia, personal computers (PCs) and graphics.

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