Analyzing TranSwitch (OTCMKTS:TXCCQ) and Allegro MicroSystems (NASDAQ:ALGM)

Allegro MicroSystems (NASDAQ:ALGM) and TranSwitch (OTCMKTS:TXCCQ) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Valuation and Earnings

This table compares Allegro MicroSystems and TranSwitch”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Allegro MicroSystems	$788.40 million	6.34	-$73.01 million	($0.16)	-168.63
TranSwitch	N/A	N/A	N/A	N/A	N/A

TranSwitch has lower revenue, but higher earnings than Allegro MicroSystems.

Institutional and Insider Ownership

56.5% of Allegro MicroSystems shares are held by institutional investors. 0.4% of Allegro MicroSystems shares are held by company insiders. Comparatively, 6.3% of TranSwitch shares are held 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 TranSwitch’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Allegro MicroSystems	-9.00%	2.09%	1.36%
TranSwitch	N/A	N/A	N/A

Volatility & Risk

Allegro MicroSystems has a beta of 1.72, indicating that its share price is 72% more volatile than the S&P 500. Comparatively, TranSwitch has a beta of 19.71, indicating that its share price is 1,871% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Allegro MicroSystems and TranSwitch, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allegro MicroSystems	1	2	10	0	2.69
TranSwitch	0	0	0	0	0.00

Allegro MicroSystems currently has a consensus target price of $38.10, indicating a potential upside of 41.22%. Given Allegro MicroSystems’ stronger consensus rating and higher possible upside, research analysts plainly believe Allegro MicroSystems is more favorable than TranSwitch.

Summary

Allegro MicroSystems beats TranSwitch on 7 of the 10 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 TranSwitch

TranSwitch Corporation, together with its subsidiaries, designs, develops, and supplies integrated circuit and intellectual property solutions that provide functionality for voice, data, and video communications equipment for the customer premises and network infrastructure markets. The company provides integrated multi-core network processor system-on-a-chip (SoC) solutions for fixed, 3G and 4G mobile, VoIP, and multimedia applications. It offers converged network infrastructure products, including infrastructure VoIP processors for wire-line and wireless carrier equipment; access VoIP processors; and EoS/EoPDH mappers and framers for carriers to transport data traffic over SONET, SDH, and PDH networks. The company also offers broadband customer premises equipment, such as connectivity solutions comprising HDMI, DisplayPort, MHL, HDP, Ethernet IP cores, and MHDP transceivers for consumer electronics, home network equipment, and industrial and automotive applications; and multi-service SoCs for customer premises equipment that support telephone voice, fax, and routing functionality over broadband access networks. TranSwitch Corporation sells its products to public network system original equipment manufacturers (OEMs), WAN and LAN equipment OEMs, Internet-oriented OEMs, and communications test and performance measurement equipment OEMs; and government, universities, and private laboratories. The company offers its products directly in North America, Taiwan, China, Japan, Korea, and Europe, as well as through a network of distributors in North America, Asia, and Europe. TranSwitch Corporation was founded in 1988 and is headquartered in Shelton, Connecticut. On November 21, 2013, TranSwitch Corporation filed a voluntary petition for liquidation under Chapter 7 in the U.S. Bankruptcy Court for the District of Connecticut.