SemiLEDs (NASDAQ:LEDS) and Arteris (NASDAQ:AIP) Critical Analysis

Arteris (NASDAQ:AIP) and SemiLEDs (NASDAQ:LEDS) are both small-cap computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, analyst recommendations, valuation, institutional ownership and profitability.

Profitability

This table compares Arteris and SemiLEDs’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arteris	-68.37%	-274.66%	-35.43%
SemiLEDs	-44.37%	-120.86%	-18.80%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Arteris and SemiLEDs, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arteris	0	1	3	0	2.75
SemiLEDs	0	0	0	0	N/A

Arteris presently has a consensus target price of $13.00, indicating a potential upside of 75.68%. Given Arteris’ higher probable upside, equities analysts plainly believe Arteris is more favorable than SemiLEDs.

Valuation and Earnings

This table compares Arteris and SemiLEDs”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arteris	$53.30 million	5.34	-$36.87 million	($1.03)	-7.18
SemiLEDs	$5.31 million	1.71	-$2.69 million	($0.47)	-2.68

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

Institutional and Insider Ownership

64.4% of Arteris shares are held by institutional investors. Comparatively, 76.3% of SemiLEDs shares are held by institutional investors. 33.7% of Arteris shares are held by insiders. Comparatively, 40.0% of SemiLEDs shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Arteris has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500. Comparatively, SemiLEDs has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.

Summary

SemiLEDs beats Arteris on 8 of the 13 factors compared between the two stocks.

About Arteris

Arteris, Inc. provides semiconductor interconnect intellectual property (IP) and System-on-Chip (Soc) Integration Automation software solutions (SIA) in the Americas, the Asia Pacific, Europe, and the Middle East. The company develops, licenses, and supports the on-chip interconnect fabric technology used in Soc designs and Network-on-Chip (NoC) interconnect IP. Its products include FlexNoC and FlexWay silicon-proven interconnect IP products; Ncore, a silicon-proven and cache coherent interconnect IP product that provides scalable, configurable, and area efficient characteristics; and CodaCache, a last-level cache semiconductor IP product. The company also offers SIA products comprising Magillem Connectivity that shortens and streamlines the SoC integration process; and Magillem Registers and CSRCompiler that addresses hardware-software integration challenges for SoCs. The company serves semiconductor manufacturers, original equipment manufacturers, hyperscale system houses, semiconductor design houses, and other producers of electronic systems. Arteris, Inc. was founded in 2003 and is headquartered in Campbell, California.

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.