NETGEAR (NASDAQ:NTGR) and Silicom (NASDAQ:SILC) Critical Analysis

NETGEAR (NASDAQ:NTGR) and Silicom (NASDAQ:SILC) are both small-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, institutional ownership, earnings, profitability, risk and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings for NETGEAR and Silicom, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NETGEAR	0	0	1	0	3.00
Silicom	0	1	0	0	2.00

NETGEAR presently has a consensus price target of $29.00, suggesting a potential upside of 9.19%. Given NETGEAR’s stronger consensus rating and higher possible upside, equities research analysts clearly believe NETGEAR is more favorable than Silicom.

Volatility & Risk

NETGEAR has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Silicom has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Profitability

This table compares NETGEAR and Silicom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NETGEAR	3.72%	-7.63%	-4.85%
Silicom	-19.57%	-8.67%	-7.39%

Valuation and Earnings

This table compares NETGEAR and Silicom”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NETGEAR	$673.76 million	1.13	$12.36 million	$0.82	32.39
Silicom	$58.11 million	1.46	-$13.71 million	($1.94)	-7.73

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

Institutional and Insider Ownership

83.0% of NETGEAR shares are held by institutional investors. Comparatively, 52.9% of Silicom shares are held by institutional investors. 2.3% of NETGEAR shares are held by company insiders. Comparatively, 25.4% of Silicom shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

NETGEAR beats Silicom on 12 of the 14 factors compared between the two stocks.

About NETGEAR

NETGEAR, Inc. provides connectivity solutions the Americas; Europe, the Middle East, Africa; and the Asia Pacific. The company operates in two segments, Connected Home, and NETGEAR for Business. The Connected Home segment offers Wi-Fi routers and home Wi-Fi mesh systems, Wi-Fi hotspots, digital displays, broadband modems, Wi-Fi gateways, Wi-Fi range extenders, powerline adapters, and Wi-Fi network adapters; and provides value-added service offerings, including security and privacy, technical support, and parental controls. The NETGEAR for Business segment provides pro AV Solutions; pro routers; enterprise grade cloud managed or standalone access points; general purpose ethernet switches; NETGEAR Insight remote management software; and NETGEAR engage controller. It markets and sells its products through wholesale distributors, traditional and online retailers, direct market resellers, value-added resellers, and broadband service providers, as well as through its direct online store. The company was incorporated in 1996 and is headquartered in San Jose, California.

About Silicom

Silicom Ltd., together with its subsidiaries, designs, manufactures, markets, and supports networking and data infrastructure solutions for servers, server-based systems, and communications devices. It offers server network interface cards; and smart cards, such as smart server adapters, which include redirector and switching cards, encryption and data compression hardware acceleration cards, forward error correction acceleration and offloading cards, time synchronization cards, and field programmable gate array-based cards. The company also provides virtualized and universal customer-premises equipment; and edge devices for SD-WAN, secure access service edge, Telco dedicated routers, and NFV deployments. It serves original equipment manufacturing, cloud, telco, mobile, and related service provider markets. The company operates in the United States, North America, Israel, Europe, and the Asia Pacific. Silicom Ltd. was incorporated in 1987 and is headquartered in Kfar Saba, Israel.