Contrasting STMicroelectronics (STM) & Cree (CREE)

STMicroelectronics (NASDAQ: CREE) and Cree (NASDAQ:CREE) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, risk, dividends, valuation and earnings.

Volatility and Risk

STMicroelectronics has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, Cree has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for STMicroelectronics and Cree, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
STMicroelectronics 0 3 3 0 2.50
Cree 2 11 5 0 2.17

STMicroelectronics currently has a consensus target price of $28.00, indicating a potential upside of 52.01%. Cree has a consensus target price of $43.98, indicating a potential upside of 4.25%. Given STMicroelectronics’ stronger consensus rating and higher probable upside, analysts plainly believe STMicroelectronics is more favorable than Cree.

Valuation and Earnings

This table compares STMicroelectronics and Cree’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
STMicroelectronics $8.35 billion 1.98 $802.00 million $0.98 18.80
Cree $1.49 billion 2.88 -$279.96 million ($0.15) -281.27

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

Dividends

STMicroelectronics pays an annual dividend of $0.20 per share and has a dividend yield of 1.1%. Cree does not pay a dividend. STMicroelectronics pays out 20.4% of its earnings in the form of a dividend.

Profitability

This table compares STMicroelectronics and Cree’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
STMicroelectronics 11.48% 20.69% 11.53%
Cree -18.74% -0.74% -0.60%

Institutional and Insider Ownership

4.2% of STMicroelectronics shares are owned by institutional investors. 1.1% of Cree shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

STMicroelectronics beats Cree on 11 of the 15 factors compared between the two stocks.

STMicroelectronics Company Profile

STMicroelectronics N.V., together with its subsidiaries, develops, manufactures, and markets semiconductor products worldwide. It operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The company offers a range of products, including discrete and standard commodity components, application-specific integrated circuits, full-custom and semi-custom devices, and application-specific standard products for analog, digital, and mixed-signal applications, as well as silicon chips and smartcards. It also provides subsystems, and assembly and other services. The company sells its products through its distributors and retailers, as well as through sales representatives. STMicroelectronics N.V. was founded in 1987 and is headquartered in Geneva, Switzerland.

Cree Company Profile

Cree, Inc. provides lighting-class light emitting diode (LED), lighting, and semiconductor products for power and radio-frequency (RF) applications in the United States, China, Europe, South Korea, Japan, Malaysia, Taiwan, and internationally. Its Lighting Products segment offers LED lighting systems and bulbs for use in settings, such as office and retail space, restaurants and hospitality, schools and universities, manufacturing, healthcare, airports, municipal, residential, street lighting and parking structures, and other applications. This segment sells its products to distributors, retailers, and customers. The company's LED Products segment provides blue and green LED chip products for use in various applications, including video screens, gaming displays, function indicator lights and automotive backlights, headlamps, and directional indicators. It also offers XLamp LED components and LED modules for lighting applications; and surface mount and through-hole packaged LED products for video, signage, general illumination, transportation, gaming, and specialty lighting applications. Its Wolfspeed segment provides silicon carbide (SiC) materials for RF, power switching, gemstones, and other applications. This segment also offers SiC-based power products consisting of SiC Schottky diodes, metal se oxide miconductor field-effect transistors, power modules, and gate driver boards for use in power supplies used in computer servers, solar inverters, uninterruptible power supplies, industrial power supplies, and other applications. In addition, this segment provides gallium nitride (GaN) die, high electron mobility transistors (HEMTs) and monolithic microwave integrated circuits (MMICs) for military, telecom, and other commercial applications; and custom die manufacturing services for GaN HEMTs and MMICs. Cree, Inc. was founded in 1987 and is headquartered in Durham, North Carolina.

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