Critical Review: ASML (NASDAQ:ASML) & MaxLinear (NASDAQ:MXL)

MaxLinear (NASDAQ:MXL) and ASML (NASDAQ:ASML) are both technology companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Institutional and Insider Ownership

90.8% of MaxLinear shares are owned by institutional investors. Comparatively, 26.1% of ASML shares are owned by institutional investors. 7.7% of MaxLinear shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

MaxLinear has a beta of 3.93, meaning that its share price is 293% more volatile than the S&P 500. Comparatively, ASML has a beta of 1.77, meaning that its share price is 77% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for MaxLinear and ASML, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MaxLinear	1	3	5	0	2.44
ASML	3	2	17	3	2.80

MaxLinear presently has a consensus target price of $94.30, suggesting a potential upside of 48.60%. ASML has a consensus target price of $2,079.12, suggesting a potential upside of 32.28%. Given MaxLinear’s higher possible upside, analysts clearly believe MaxLinear is more favorable than ASML.

Profitability

This table compares MaxLinear and ASML’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MaxLinear	-4.45%	12.89%	7.50%
ASML	34.10%	64.24%	26.08%

Earnings and Valuation

This table compares MaxLinear and ASML”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MaxLinear	$467.64 million	12.31	-$136.68 million	($0.37)	-171.51
ASML	$36.95 billion	16.39	$10.87 billion	$40.62	38.70

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

Summary

ASML beats MaxLinear on 10 of the 15 factors compared between the two stocks.

About MaxLinear

MaxLinear, Inc. provides communications systems-on-chip solutions worldwide. Its products integrate various portions of a high-speed communication system, including radio frequency, high-performance analog, mixed-signal, digital signal processing, security engines, data compression and networking layers, and power management. The company's products are used in various electronic devices, such as radio transceivers and modems for 4G/5G base-station and backhaul infrastructure; optical transceivers targeting hyperscale data centers; Wi-Fi and wireline routers for home networking; broadband modems compliant with data over cable service interface specifications, passive optical fiber standards, and digital subscriber line, as well as power management and interface products. It serves electronics distributors, module makers, original equipment manufacturers, and original design manufacturers through a direct sales force, third-party sales representatives, and a network of distributors. The company was incorporated in 2003 and is headquartered in Carlsbad, California.

About ASML

ASML Holding N.V. develops, produces, markets, sells, and services advanced semiconductor equipment systems for chipmakers. It offers advanced semiconductor equipment systems, including lithography, metrology, and inspection systems. The company also provides extreme ultraviolet lithography systems; and deep ultraviolet lithography systems comprising immersion and dry lithography solutions to manufacture various range of semiconductor nodes and technologies. In addition, it offers metrology and inspection systems, including YieldStar optical metrology systems to assess the quality of patterns on the wafers; and HMI electron beam solutions to locate and analyze individual chip defects. Further, the company provides computational lithography solutions, and lithography systems and control software solutions; and refurbishes and upgrades lithography systems, as well as offers customer support and related services. It operates in Japan, South Korea, Singapore, Taiwan, China, rest of Asia, the Netherlands, rest of Europe, the Middle East, Africa, and the United States. The company was formerly known as ASM Lithography Holding N.V. and changed its name to ASML Holding N.V. in 2001. ASML Holding N.V. was founded in 1984 and is headquartered in Veldhoven, the Netherlands.