Reviewing Allegro MicroSystems (NASDAQ:ALGM) & Lam Research (NASDAQ:LRCX)

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

Earnings & Valuation

This table compares Allegro MicroSystems and Lam Research”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Allegro MicroSystems	$890.10 million	11.59	-$14.90 million	($0.09)	-615.78
Lam Research	$21.68 billion	21.51	$5.36 billion	$5.30	70.36

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

Insider & Institutional Ownership

56.5% of Allegro MicroSystems shares are owned by institutional investors. Comparatively, 84.6% of Lam Research shares are owned by institutional investors. 0.4% of Allegro MicroSystems shares are owned by insiders. Comparatively, 0.3% of Lam Research shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Allegro MicroSystems and Lam Research, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allegro MicroSystems	1	1	10	0	2.75
Lam Research	0	6	28	0	2.82

Allegro MicroSystems currently has a consensus price target of $54.30, indicating a potential downside of 2.02%. Lam Research has a consensus price target of $334.43, indicating a potential downside of 10.32%. Given Allegro MicroSystems’ higher possible upside, equities research analysts clearly believe Allegro MicroSystems is more favorable than Lam Research.

Profitability

This table compares Allegro MicroSystems and Lam Research’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Allegro MicroSystems	-1.67%	6.09%	4.11%
Lam Research	30.94%	66.21%	31.61%

Risk & Volatility

Allegro MicroSystems has a beta of 1.98, meaning that its stock price is 98% more volatile than the S&P 500. Comparatively, Lam Research has a beta of 1.85, meaning that its stock price is 85% more volatile than the S&P 500.

Summary

Lam Research beats Allegro MicroSystems on 11 of the 14 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 Lam Research

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers ALTUS systems to deposit conformal films for tungsten metallization applications; SABRE electrochemical deposition products for copper interconnect transition that offers copper damascene manufacturing; SOLA ultraviolet thermal processing products for film treatments; and VECTOR plasma-enhanced CVD ALD products. It also provides SPEED gapfill high-density plasma chemical vapor deposition products; and Striker single-wafer atomic layer deposition products for dielectric film solutions. In addition, the company offers Flex for dielectric etch applications; Kiyo for conductor etch applications; Syndion for through-silicon via etch applications; and Versys metal products for metal etch processes. Further, it provides Coronus bevel clean products to enhance die yield; Da Vinci, DV-Prime, EOS, and SP series products to address various wafer cleaning applications; and Metryx mass metrology systems for high precision in-line mass measurement in semiconductor wafer manufacturing. The company sells its products and services to semiconductors industry in the United States, China, Europe, Japan, Korea, Southeast Asia, Taiwan, and internationally. The company was incorporated in 1980 and is headquartered in Fremont, California.