Contrasting Aquantia (AQ) & Broadcom (AVGO)

Aquantia (NYSE: AQ) and Broadcom (NASDAQ:AVGO) are both computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, valuation, dividends, institutional ownership, profitability and risk.

Profitability

This table compares Aquantia and Broadcom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aquantia N/A N/A N/A
Broadcom 41.37% 29.50% 13.75%

Analyst Recommendations

This is a summary of recent ratings and price targets for Aquantia and Broadcom, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aquantia 0 0 5 0 3.00
Broadcom 0 2 31 1 2.97

Aquantia presently has a consensus price target of $14.80, suggesting a potential upside of 27.92%. Broadcom has a consensus price target of $310.58, suggesting a potential upside of 31.61%. Given Broadcom’s higher possible upside, analysts clearly believe Broadcom is more favorable than Aquantia.

Insider & Institutional Ownership

22.9% of Aquantia shares are held by institutional investors. Comparatively, 89.0% of Broadcom shares are held by institutional investors. 3.3% of Broadcom shares are held 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.

Earnings & Valuation

This table compares Aquantia and Broadcom’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Aquantia $103.37 million 3.75 -$5.41 million ($0.48) -24.10
Broadcom $17.64 billion 5.50 $1.69 billion $14.30 16.50

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

Dividends

Broadcom pays an annual dividend of $7.00 per share and has a dividend yield of 3.0%. Aquantia does not pay a dividend. Broadcom pays out 49.0% of its earnings in the form of a dividend.

Summary

Broadcom beats Aquantia on 13 of the 15 factors compared between the two stocks.

About Aquantia

Aquantia Corp., together with its subsidiaries, designs, develops, and markets advanced high-speed communication integrated circuits for Ethernet connectivity in the data center, enterprise infrastructure, and access markets worldwide. Its products include corporate and cloud data center products; enterprise infrastructure products; and access products, such as client connectivity and carrier access. The company sells its products to integrated circuit suppliers, original equipment manufacturers, and original design manufacturers through direct sales. Aquantia Corp. was founded in 2004 and is headquartered in San Jose, California.

About Broadcom

Broadcom Limited designs, develops, and supplies a range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates through four segments: Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial & Other. The Wired Infrastructure segment provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; Ethernet switching and routing application products; embedded processors and controllers; serializer/deserializer application specific integrated circuits; optical and copper, and physical layers; and fiber optic laser and receiver components. The Wireless Communications segment offers RF front end modules, filters, and power amplifiers; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; and custom touch controllers. The Enterprise Storage segment provides serial attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express switches; fiber channel host bus adapters; read channel based SoCs; and preamplifiers. The Industrial & Other segment offers optocouplers, industrial fiber optics, motion control encoders and subsystems, and light emitting diodes. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. The company was formerly known as Avago Technologies Limited and changed its name to Broadcom Limited in February 2016. Broadcom Limited was founded in 2005 and is headquartered in Singapore.

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