Contrasting Sequans Communications (NYSE:SQNS) & Allegro MicroSystems (NASDAQ:ALGM)

Allegro MicroSystems (NASDAQ:ALGM) and Sequans Communications (NYSE:SQNS) are both technology companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, dividends, risk, institutional ownership, valuation, profitability and analyst recommendations.

Profitability

This table compares Allegro MicroSystems and Sequans Communications’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Allegro MicroSystems	3.07%	10.34%	7.06%
Sequans Communications	-516.47%	-75.19%	-37.31%

Analyst Recommendations

This is a summary of recent ratings and price targets for Allegro MicroSystems and Sequans Communications, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allegro MicroSystems	0	2	10	1	2.92
Sequans Communications	1	1	3	0	2.40

Allegro MicroSystems presently has a consensus price target of $48.75, suggesting a potential upside of 50.06%. Sequans Communications has a consensus price target of $12.67, suggesting a potential upside of 410.96%. Given Sequans Communications’ higher probable upside, analysts plainly believe Sequans Communications is more favorable than Allegro MicroSystems.

Insider & Institutional Ownership

56.5% of Allegro MicroSystems shares are owned by institutional investors. Comparatively, 63.3% of Sequans Communications shares are owned by institutional investors. 0.5% of Allegro MicroSystems shares are owned by company insiders. Comparatively, 9.4% of Sequans Communications 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.

Earnings and Valuation

This table compares Allegro MicroSystems and Sequans Communications”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	$890.10 million	6.81	-$14.90 million	$0.15	216.57
Sequans Communications	$27.19 million	1.37	-$109.28 million	($10.10)	-0.25

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

Volatility and Risk

Allegro MicroSystems has a beta of 2.05, indicating that its stock price is 105% more volatile than the S&P 500. Comparatively, Sequans Communications has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500.

Summary

Allegro MicroSystems beats Sequans Communications on 12 of the 15 factors compared between the two stocks.

About Allegro MicroSystems

Allegro MicroSystems designs, develops and manufactures semiconductor devices used to sense and control motion, position, speed and electrical current. Its products include magnetic sensor integrated circuits and power integrated circuits for automotive and industrial applications. The company’s portfolio includes current and position sensors, motor-driver and power-management chips, and solutions for vehicle systems such as electrification, safety and driver assistance. Its products also support industrial automation and other applications that require precise sensing or control.

About Sequans Communications

Sequans Communications S.A. is a fabless semiconductor company that develops cellular connectivity solutions for the Internet of Things (IoT). Its technology is designed to connect devices and equipment to 4G and 5G networks, supporting applications such as asset tracking, smart metering, industrial monitoring, security systems, and connected consumer products. The company offers chipsets, modules, and related software for several cellular IoT applications. Its product portfolio has included solutions for LTE-M and NB-IoT, which are intended for low-power, wide-area connectivity, as well as products supporting broader 4G and 5G applications.