Critical Analysis: Allegro MicroSystems (NASDAQ:ALGM) versus Soitec (OTCMKTS:SLOIF)

Allegro MicroSystems (NASDAQ:ALGM) and Soitec (OTCMKTS:SLOIF) are both mid-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

56.5% of Allegro MicroSystems shares are owned by institutional investors. 0.5% of Allegro MicroSystems shares are owned by company 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.

Profitability

This table compares Allegro MicroSystems and Soitec’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Allegro MicroSystems	-10.07%	1.04%	0.70%
Soitec	N/A	N/A	N/A

Analyst Ratings

This is a summary of recent recommendations for Allegro MicroSystems and Soitec, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allegro MicroSystems	0	1	7	0	2.88
Soitec	0	0	0	0	0.00

Allegro MicroSystems presently has a consensus price target of $30.00, suggesting a potential downside of 3.10%. Given Allegro MicroSystems’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Allegro MicroSystems is more favorable than Soitec.

Risk and Volatility

Allegro MicroSystems has a beta of 1.67, indicating that its stock price is 67% more volatile than the S&P 500. Comparatively, Soitec has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500.

Valuation & Earnings

This table compares Allegro MicroSystems and Soitec”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Allegro MicroSystems	$725.01 million	7.90	-$73.01 million	($0.39)	-79.38
Soitec	$937.30 million	2.18	$98.66 million	N/A	N/A

Soitec has higher revenue and earnings than Allegro MicroSystems.

Summary

Allegro MicroSystems beats Soitec on 9 of the 12 factors compared between the two stocks.

About Allegro MicroSystems

Allegro MicroSystems, Inc., together with its subsidiaries, designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; and power ICs comprising motor driver ICs, regulator and LED driver ICs, and isolated gate drivers. The company sells its products to original equipment manufacturers and distributors primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment. It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets. The company was founded in 1990 and is headquartered in Manchester, New Hampshire. Allegro MicroSystems, Inc. is a subsidiary of Sanken Electric Co., Ltd.

About Soitec

Soitec SA designs and manufactures semiconductor materials worldwide. Its products are used to manufacture chips that are used in smart phones, tablets, computers, IT servers, and data centers, as well as electronic components in cars, connected devices, and industrial and medical equipment. It provides CONNECT Radio Frequency Silicon-on-Insulator (RF-SOI) for smartphone front-end modules; CONNECT Piezoelectric-on-Insulator RF filters for smartphone; and CONNECT RF gallium nitride for 5g infrastructure base stations and smartphones, as well as CONNECT Fully Depleted Silicon-On-Insulator (FD-SOI). The company also offers Auto Power-SOI product for automotive and industrial markets; Auto Smartsic for green mobility; and AUTO POWER-allium nitride for power efficiency, as well as AUTO FD-SOI for automotive radar and processors. In addition, it provides Smart photonics-SOI products for optical networking; Smart Imager-SOI products for next generation 3D image sensing; Smart FD-SOI for ultra low power, energy efficient, and body biasing; smart partially depleted (PD) -SOI for high-performance computing markets. Soitec SA was incorporated in 1992 and is headquartered in Bernin, France.