SemiLEDs (LEDS) vs. Aquantia (AQ) Critical Review

SemiLEDs (NASDAQ: LEDS) and Aquantia (NYSE:AQ) are both small-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, risk, analyst recommendations, earnings and profitability.

Insider & Institutional Ownership

1.6% of SemiLEDs shares are held by institutional investors. Comparatively, 7.7% of Aquantia shares are held by institutional investors. 40.1% of SemiLEDs shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for SemiLEDs and Aquantia, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SemiLEDs 0 0 0 0 N/A
Aquantia 0 0 5 0 3.00

Aquantia has a consensus price target of $14.80, indicating a potential upside of 1.09%. Given Aquantia’s higher probable upside, analysts plainly believe Aquantia is more favorable than SemiLEDs.

Profitability

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

Net Margins Return on Equity Return on Assets
SemiLEDs -44.54% -40.28% -18.90%
Aquantia N/A N/A N/A

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SemiLEDs $9.21 million 1.64 -$4.09 million ($1.07) -3.99
Aquantia $103.37 million 4.74 -$5.42 million N/A N/A

SemiLEDs has higher earnings, but lower revenue than Aquantia.

Summary

Aquantia beats SemiLEDs on 8 of the 10 factors compared between the two stocks.

About SemiLEDs

SemiLEDs Corporation develops, manufactures and sells light emitting diode (LED) chips and LED components. The Company’s products are used primarily for general lighting applications, including street lights and commercial, industrial and residential lighting. Its LED chips may also be used in specialty industrial applications, such as ultraviolet (UV), curing of polymers, LED light therapy in medical/cosmetic applications, counterfeit detection, LED lighting for horticulture applications, architectural lighting and entertainment lighting. The Company produces a range of blue, white, green and UV LED chips, including its Enhanced Vertical (EV) LED product series, ranging from chip sizes of approximately 380 microns (um) by 380um to 1,520um by 1,520um. It designs, assembles and sells lighting fixtures and systems for general lighting applications, including commercial, residential and industrial lighting. Its lighting products consist primarily of LED luminaries and LED retrofits.

About Aquantia

Aquantia Corp is engaged in developing and supplying connectivity solutions for data centers, enterprise and wireless local area network (WLAN) applications. The Company offers 10 gigabyte Ethernet and Multi-Gig Ethernet Silicon product for data center and cloud, and the enterprise and WLAN markets. For data center and cloud market, it offers 10GBASE-T PHYs product line, which includes 28 nanometer technology products, such as AQ2402, AQ2403, AQ2203 and AQ2104; 40 nanometer technology products, such as AQ1402, AQ1202 and AQ1103, and 90 nanometer technology product, AQ1002. For enterprise and WLAN market, it offers AQrate product line, including 28 nanometer technology products, such as AQR405, AQR205 and AQR105. Its AQrate product line consists of single, dual and quad-port configurations for applications ranging from client personal computers and others for single and dual-port devices, to Enterprise and Campus Ethernet switches for the quad-port versions.

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