STMicroelectronics (NYSE:STM – Get Free Report) and Analog Devices (NASDAQ:ADI – Get Free Report) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, profitability, earnings, analyst recommendations and risk.
Earnings and Valuation
This table compares STMicroelectronics and Analog Devices’ revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| STMicroelectronics | $17.32 billion | 2.25 | $3.96 billion | $4.64 | 9.23 |
| Analog Devices | $12.84 billion | 6.70 | $2.75 billion | $7.36 | 23.45 |
STMicroelectronics has higher revenue and earnings than Analog Devices. STMicroelectronics is trading at a lower price-to-earnings ratio than Analog Devices, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| STMicroelectronics | 1 | 2 | 8 | 0 | 2.64 |
| Analog Devices | 0 | 7 | 16 | 0 | 2.70 |
STMicroelectronics presently has a consensus target price of $47.25, indicating a potential upside of 10.35%. Analog Devices has a consensus target price of $204.04, indicating a potential upside of 18.21%. Given Analog Devices’ stronger consensus rating and higher probable upside, analysts plainly believe Analog Devices is more favorable than STMicroelectronics.
Risk and Volatility
STMicroelectronics has a beta of 1.63, meaning that its stock price is 63% more volatile than the S&P 500. Comparatively, Analog Devices has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500.
Profitability
This table compares STMicroelectronics and Analog Devices’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| STMicroelectronics | 25.36% | 33.67% | 21.59% |
| Analog Devices | 29.23% | 15.20% | 11.04% |
Institutional and Insider Ownership
5.6% of STMicroelectronics shares are held by institutional investors. Comparatively, 85.6% of Analog Devices shares are held by institutional investors. 0.5% of Analog Devices shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Dividends
STMicroelectronics pays an annual dividend of $0.24 per share and has a dividend yield of 0.6%. Analog Devices pays an annual dividend of $3.44 per share and has a dividend yield of 2.0%. STMicroelectronics pays out 5.2% of its earnings in the form of a dividend. Analog Devices pays out 46.7% 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. Analog Devices has raised its dividend for 21 consecutive years. Analog Devices is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
Analog Devices beats STMicroelectronics on 11 of the 17 factors compared between the two stocks.
About STMicroelectronics
STMicroelectronics N.V., together with its subsidiaries, designs, develops, manufactures, and sells semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The Automotive and Discrete Group segment offers automotive integrated circuits (ICs), and discrete and power transistor products. The Analog, MEMS and Sensors Group segment provides industrial application-specific integrated circuits (ASICs) and application-specific standard products (ASSPs); general purpose analog products; custom analog ICs; wireless charging solutions; galvanic isolated gate drivers; low and high voltage amplifiers, comparators, and current-sense amplifiers; MasterGaN, a solution that integrates a silicon driver and GaN power transistors in a single package; wireline and wireless connectivity ICs; touch screen controllers; micro-electro-mechanical systems (MEMS) products, including sensors or actuators; and optical sensing solutions. The Microcontrollers and Digital ICs Group segment offers general purpose and secure microcontrollers; radio frequency (RF) and electrically erasable programmable read-only memories; and RF, digital, and mixed-signal ASICs. It also provides assembly and other services. The company sells its products through distributors and retailers, as well as through sales representatives. It serves automotive, industrial, personal electronics and communications equipment, and computers and peripherals markets. STMicroelectronics N.V. was incorporated in 1987 and is headquartered in Geneva, Switzerland.
About Analog Devices
Analog Devices, Inc. designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems that leverage analog, mixed-signal, and digital signal processing technologies. The company provides data converter products, which translate real-world analog signals into digital data, as well as translates digital data into analog signals; power management and reference products for power conversion, driver monitoring, sequencing, and energy management applications in the automotive, communications, industrial, and high-end consumer markets; and power ICs that include performance, integration, and software design simulation tools for accurate power supply designs. It also offers high-performance amplifiers to condition analog signals; and radio frequency and microwave ICs to support cellular infrastructure; and micro-electro-mechanical systems technology solutions, including accelerometers used to sense acceleration, gyroscopes for sense rotation, inertial measurement units to sense multiple degrees of freedom, and broadband switches for radio and instrument systems, as well as isolators. In addition, the company provides digital signal processing and system products for high-speed numeric calculations. It serves clients in the industrial, automotive, consumer, instrumentation, aerospace, and communications markets through a direct sales force, third-party distributors, and independent sales representatives in the United States, rest of North and South America, Europe, Japan, China, and rest of Asia, as well as through its Website. Analog Devices, Inc. was incorporated in 1965 and is headquartered in Wilmington, Massachusetts.
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