Photronics (NASDAQ:PLAB) versus Pixelworks (NASDAQ:PXLW) Critical Survey

Photronics (NASDAQ:PLAB) and Pixelworks (NASDAQ:PXLW) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.

Valuation & Earnings

This table compares Photronics and Pixelworks’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Photronics $535.28 million 1.22 $42.05 million $0.58 16.84
Pixelworks $76.55 million 1.62 -$4.62 million ($0.07) -46.71

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

Insider and Institutional Ownership

93.2% of Photronics shares are owned by institutional investors. Comparatively, 35.5% of Pixelworks shares are owned by institutional investors. 3.6% of Photronics shares are owned by insiders. Comparatively, 4.6% of Pixelworks shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Photronics and Pixelworks, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Photronics 0 0 1 0 3.00
Pixelworks 0 0 2 0 3.00

Photronics currently has a consensus price target of $12.00, suggesting a potential upside of 22.82%. Pixelworks has a consensus price target of $7.00, suggesting a potential upside of 114.07%. Given Pixelworks’ higher probable upside, analysts clearly believe Pixelworks is more favorable than Photronics.

Volatility and Risk

Photronics has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500. Comparatively, Pixelworks has a beta of 1.96, meaning that its stock price is 96% more volatile than the S&P 500.

Profitability

This table compares Photronics and Pixelworks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Photronics 7.30% 4.10% 3.36%
Pixelworks -5.07% -9.25% -6.42%

Summary

Photronics beats Pixelworks on 8 of the 13 factors compared between the two stocks.

Photronics Company Profile

Photronics, Inc., together with its subsidiaries, manufactures and sells photomasks in Taiwan, Korea, the United States, Europe, and internationally. The company offers photomasks, which are high precision photographic quartz or glass plates containing microscopic images of electronic circuits for use in the manufacture of semiconductors and flat panel displays (FPDs), as well as that are used as masters to transfer circuit patterns onto semiconductor wafers and flat panel display substrates during the fabrication of integrated circuits, FPDs, and other types of electrical and optical components. It sells its products to semiconductor or FPD designers, manufacturers, and foundries, as well as to other high performance electronics manufacturers through its sales personnel and customer service representatives. The company was formerly known as Photronic Labs, Inc. and changed its name to Photronics, Inc. in 1990. Photronics, Inc. was founded in 1969 and is based in Brookfield, Connecticut.

Pixelworks Company Profile

Pixelworks, Inc. designs, develops, and markets video processing semiconductors, intellectual property cores, software, and custom application specific integrated circuits (ICs) solutions for video applications. Its products enable customers to deliver the energy efficient video quality on their devices. The company provides video display processor products, including image processor ICs, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing within high-end display systems; and video co-processor ICs that work with an image processor to post-process video signals to enhance the performance or feature set of the overall video solution, as well as transcoder ICs, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing for converting bitrates, resolutions, and codecs. As of December 31, 2017, it had an intellectual property portfolio of 536 patents related to the visual display of digital image data. The company's products are used in digital projection systems, tablets, and smartphones, as well as over-the-air streaming devices. Pixelworks, Inc. sells its products through a direct sales force, as well as distributors and manufacturers' representatives worldwide. The company was founded in 1997 and is based in San Jose, California.

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