Head-To-Head Comparison: Teradyne (NASDAQ:TER) & Broadcom (NASDAQ:AVGO)

Teradyne (NASDAQ:TER) and Broadcom (NASDAQ:AVGO) are both large-cap technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, earnings, dividends, profitability, analyst recommendations, valuation and risk.

Analyst Ratings

This is a summary of current recommendations for Teradyne and Broadcom, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Teradyne	0	5	11	1	2.76
Broadcom	0	5	39	1	2.91

Teradyne presently has a consensus target price of $397.73, suggesting a potential upside of 49.65%. Broadcom has a consensus target price of $530.52, suggesting a potential upside of 53.68%. Given Broadcom’s stronger consensus rating and higher possible upside, analysts plainly believe Broadcom is more favorable than Teradyne.

Volatility and Risk

Teradyne has a beta of 1.73, suggesting that its stock price is 73% more volatile than the S&P 500. Comparatively, Broadcom has a beta of 1.49, suggesting that its stock price is 49% more volatile than the S&P 500.

Profitability

This table compares Teradyne and Broadcom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Teradyne	27.46%	43.81%	30.22%
Broadcom	42.94%	48.33%	23.78%

Dividends

Teradyne pays an annual dividend of $0.52 per share and has a dividend yield of 0.2%. Broadcom pays an annual dividend of $2.60 per share and has a dividend yield of 0.8%. Teradyne pays out 6.0% of its earnings in the form of a dividend. Broadcom pays out 33.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Teradyne has increased its dividend for 1 consecutive years and Broadcom has increased its dividend for 15 consecutive years. Broadcom is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Teradyne	$5.00 billion	8.30	$554.05 million	$8.71	30.51
Broadcom	$89.10 billion	18.49	$23.13 billion	$7.83	44.09

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

Institutional and Insider Ownership

99.8% of Teradyne shares are held by institutional investors. Comparatively, 76.4% of Broadcom shares are held by institutional investors. 0.2% of Teradyne shares are held by company insiders. Comparatively, 1.9% of Broadcom shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Broadcom beats Teradyne on 12 of the 17 factors compared between the two stocks.

About Teradyne

Teradyne, Inc. develops and supplies automated test equipment and robotics used by manufacturers around the world. Its test systems help customers evaluate the performance and reliability of semiconductor devices, electronic products, wireless components and storage products. The company’s offerings include semiconductor test systems, system-level test equipment and wireless test solutions. Teradyne also serves industrial automation markets through Universal Robots, which makes collaborative robots, and Mobile Industrial Robots, which develops autonomous mobile robots for moving materials in factories and other facilities.

About Broadcom

Broadcom Inc. is a global technology company that designs and supplies semiconductor products and infrastructure software. Its semiconductor portfolio includes chips and components used in networking, broadband communications, wireless connectivity, data storage, and industrial applications. The company serves businesses across a range of industries, including communications, enterprise technology, and consumer electronics. Broadcom also provides infrastructure software, including products for virtualization, cloud computing, cybersecurity, and enterprise operations.