Comparing Applied Materials (NASDAQ:AMAT) and Diodes (NASDAQ:DIOD)

Applied Materials (NASDAQ:AMAT) and Diodes (NASDAQ:DIOD) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, dividends, risk, institutional ownership and valuation.

Volatility and Risk

Applied Materials has a beta of 1.66, indicating that its stock price is 66% more volatile than the S&P 500. Comparatively, Diodes has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500.

Profitability

This table compares Applied Materials and Diodes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Applied Materials 22.10% 47.88% 19.63%
Diodes 9.44% 13.69% 8.77%

Institutional & Insider Ownership

77.5% of Applied Materials shares are owned by institutional investors. Comparatively, 80.8% of Diodes shares are owned by institutional investors. 0.4% of Applied Materials shares are owned by insiders. Comparatively, 5.3% of Diodes shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Applied Materials and Diodes, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Materials 0 7 16 0 2.70
Diodes 0 2 1 0 2.33

Applied Materials presently has a consensus price target of $51.95, indicating a potential upside of 20.93%. Given Applied Materials’ stronger consensus rating and higher probable upside, research analysts clearly believe Applied Materials is more favorable than Diodes.

Earnings and Valuation

This table compares Applied Materials and Diodes’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Applied Materials $17.25 billion 2.33 $3.31 billion $4.45 9.65
Diodes $1.21 billion 1.42 $104.02 million $2.38 14.26

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

Dividends

Applied Materials pays an annual dividend of $0.84 per share and has a dividend yield of 2.0%. Diodes does not pay a dividend. Applied Materials pays out 18.9% of its earnings in the form of a dividend.

Summary

Applied Materials beats Diodes on 12 of the 16 factors compared between the two stocks.

About Applied Materials

Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, display, and related industries. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation and nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices, as well as equipment for flexible substrates. The company serves manufacturers of semiconductor wafers and chips, liquid crystal and organic light-emitting diode displays, and other electronic devices. It operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. Applied Materials, Inc. was founded in 1967 and is headquartered in Santa Clara, California.

About Diodes

Diodes Incorporated, together with its subsidiaries, designs, manufactures, and supplies application-specific standard products in the discrete, logic, and analog and mixed-signal semiconductor markets in Asia, North America, and Europe. It primarily focuses on low pin count semiconductor devices with one or more active or passive components. The company offers discrete semiconductor products, such as performance Schottky rectifiers and diodes; Zener and performance Zener diodes, including tight tolerance and low operating current type; standard, fast, super-fast, and ultra-fast recovery rectifiers; bridge rectifiers; switching diodes; small signal bipolar and pre-biased transistors; MOSFETs; thyristor surge protection devices; and transient voltage suppressors. It also provides analog products comprising power management devices consisting of AC-DC and DC-DC converters, USB power switches, and low dropout and linear voltage regulators; linear devices, such as operational amplifiers and comparators, current monitors, voltage references, and reset generators; LED lighting drivers; audio amplifiers; and sensor products, including hall-effect sensors and motor drivers. In addition, the company offers standard logic products comprising low-voltage complementary metal–oxide–semiconductor (CMOS) and high-speed CMOS devices; ultra-low power CMOS logic products and analog switches; multichip products and co-packaged discrete, analog, and mixed-signal silicon in miniature packages; silicon and silicon epitaxial wafers; and crystals and oscillators. It sells its products to the consumer electronics, computing, communications, industrial, and automotive markets through direct sales and marketing personnel, independent sales representatives, and distributors. Diodes Incorporated was founded in 1959 and is headquartered in Plano, Texas.

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