Exar (EXAR) vs. STMicroelectronics (STM) Critical Review

Exar (NYSE: EXAR) and STMicroelectronics (NYSE:STM) are both technology companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, dividends, valuation and profitability.

Risk & Volatility

Exar has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500. Comparatively, STMicroelectronics has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Exar 6.30% 2.37% 2.13%
STMicroelectronics 7.84% 13.47% 7.51%

Earnings and Valuation

This table compares Exar and STMicroelectronics’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Exar N/A N/A N/A $0.18 72.17
STMicroelectronics $6.97 billion 2.79 $165.00 million $0.68 31.40

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Exar and STMicroelectronics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Exar 0 2 1 0 2.33
STMicroelectronics 1 2 5 0 2.50

Exar currently has a consensus target price of $13.00, suggesting a potential upside of 0.08%. STMicroelectronics has a consensus target price of $20.17, suggesting a potential downside of 5.54%. Given Exar’s higher probable upside, equities research analysts plainly believe Exar is more favorable than STMicroelectronics.

Insider and Institutional Ownership

78.8% of Exar shares are held by institutional investors. Comparatively, 5.1% of STMicroelectronics shares are held by institutional investors. 2.5% of Exar shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

STMicroelectronics pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Exar does not pay a dividend. STMicroelectronics pays out 29.4% of its earnings in the form of a dividend.

Summary

STMicroelectronics beats Exar on 8 of the 13 factors compared between the two stocks.

About Exar

Exar Corporation (Exar) designs, develops and markets analog mixed-signal integrated circuits (ICs) and sub-system solutions. The Company’s products are deployed in a range of applications, such as industrial, instrumentation and medical equipment, networking and telecommunication systems, servers, enterprise storage systems, flat panel displays, light emitting diode (LED) lighting solutions, set top boxes and digital video recorders. Exar’s product portfolio includes connectivity, power management, high performance analog, communications, processors, flat panel display and LED lighting. The Company designs and develops amplifiers and data converters that support a range of signal path and conditioning needs of networking, industrial control and embedded applications. The Company markets its products to three primary markets, such as industrial and embedded systems, consumer and infrastructure.

About STMicroelectronics

STMicroelectronics N.V. is a global semiconductor company that designs, develops, manufactures and markets a range of products, including discrete and standard commodity components, and application-specific integrated circuits (ASICs) for analog, digital and mixed-signal applications. The Company’s segments include Automotive and Discrete Group (ADG), Analog and MEMS Group (AMG), Microcontrollers and Digital ICs Group (MDG), and Others. ADG comprises all dedicated automotive Integrated Circuits (ICs), and discrete and power transistor products. AMG includes low-power analog ICs for all markets; smart power products; Touch Screen Controllers; Low Power Connectivity solutions for Internet of Things (IoT), and power conversion products. MDG comprises general purpose and secure microcontrollers, and Electrically Erasable Programmable Read-Only Memory memories. The Others segment includes all the financial values related to the Imaging Product Division, Subsystems and other products.

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