Critical Analysis: Credo Technology Group (NASDAQ:CRDO) vs. SemiLEDS (NASDAQ:LEDS)

SemiLEDS (NASDAQ:LEDS) and Credo Technology Group (NASDAQ:CRDO) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.

Earnings and Valuation

This table compares SemiLEDS and Credo Technology Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SemiLEDS	$43.01 million	0.27	-$1.13 million	($0.28)	-5.07
Credo Technology Group	$436.77 million	67.86	$52.18 million	$1.80	89.27

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

Risk and Volatility

SemiLEDS has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500. Comparatively, Credo Technology Group has a beta of 2.72, suggesting that its stock price is 172% more volatile than the S&P 500.

Insider and Institutional Ownership

76.3% of SemiLEDS shares are held by institutional investors. Comparatively, 80.5% of Credo Technology Group shares are held by institutional investors. 57.4% of SemiLEDS shares are held by company insiders. Comparatively, 11.8% of Credo Technology Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares SemiLEDS and Credo Technology Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SemiLEDS	-6.71%	-89.53%	-13.38%
Credo Technology Group	31.81%	29.63%	26.20%

Analyst Ratings

This is a breakdown of recent ratings and target prices for SemiLEDS and Credo Technology Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SemiLEDS	1	0	0	0	1.00
Credo Technology Group	0	3	14	1	2.89

Credo Technology Group has a consensus price target of $207.81, indicating a potential upside of 29.33%. Given Credo Technology Group’s stronger consensus rating and higher possible upside, analysts plainly believe Credo Technology Group is more favorable than SemiLEDS.

Summary

Credo Technology Group beats SemiLEDS on 14 of the 15 factors compared between the two stocks.

About SemiLEDS

SemiLEDs Corporation develops, manufactures, and sells light emitting diode (LED) chips, LED components, and LED modules and systems in the United States, Taiwan, the Netherlands, Germany, Japan, and internationally. The company also sells enhanced vertical, LED product series in blue, white, green, and UV; LED chips to packagers or distributors; and lighting products primarily to original design manufacturers of lighting products and the end-users of lighting devices, as well as packs and sells its LED chips. Its products are used for general lighting applications, including commercial, industrial, and residential lighting; and specialty industrial applications, such as ultraviolet or UV, curing of polymers, LED light therapy in medical/cosmetic applications, counterfeit detection, germicidal and viricidal devices LED lighting for horticulture applications, architectural lighting, and entertainment lighting. The company was incorporated in 2005 and is based in Chu-Nan, Taiwan.

About Credo Technology Group

Credo Technology Group Holding Ltd provides various high-speed connectivity Credo Technology Group Holding Ltd provides various high-speed connectivity solutions for optical and electrical Ethernet applications in the United States, Taiwan, Mainland China, Hong Kong, and internationally. Its products include HiWire active electrical cables, optical digital signal processors, low-power line card PHY, serializer/deserializer (SerDes) chiplets, and SerDes IP, as well as integrated circuits, active electrical cables. The company also offers intellectual property solutions consist of SerDes IP licensing. It sells its products to hyperscalers, original equipment manufacturers, original design manufacturers and optical module manufacturers, as well as into the enterprise and HPC markets. The company was founded in 2008 and is based in Grand Cayman, Cayman Islands.