Critical Contrast: Switch (SWCH) vs. Sigma Designs (SIGM)

Switch (NASDAQ: SWCH) and Sigma Designs (NASDAQ:SIGM) are both small-cap technology companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.

Institutional and Insider Ownership

60.9% of Sigma Designs shares are owned by institutional investors. 4.5% of Sigma Designs shares are owned by company 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.

Analyst Recommendations

This is a summary of recent ratings and price targets for Switch and Sigma Designs, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Switch 0 5 5 0 2.50
Sigma Designs 1 2 3 0 2.33

Switch currently has a consensus target price of $22.20, suggesting a potential upside of 16.05%. Sigma Designs has a consensus target price of $7.50, suggesting a potential upside of 23.97%. Given Sigma Designs’ higher probable upside, analysts plainly believe Sigma Designs is more favorable than Switch.

Valuation and Earnings

This table compares Switch and Sigma Designs’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Switch N/A N/A N/A N/A N/A
Sigma Designs $184.52 million 1.26 -$6.00 million ($0.94) -6.44

Switch has higher revenue, but lower earnings than Sigma Designs.

Profitability

This table compares Switch and Sigma Designs’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Switch 16.24% N/A N/A
Sigma Designs -19.53% -18.73% -13.02%

Summary

Switch beats Sigma Designs on 5 of the 9 factors compared between the two stocks.

Switch Company Profile

Switch, Inc. is a technology infrastructure company. The Company is developer and operator of the SUPERNAP, data center facilities, and provides colocation, telecommunications, cloud services, and content ecosystems. The Company designs, constructs and operates hyperscale data centers that address the growing challenges facing the data center industry. The Company’s patented technologies include 100% hot aisle containment rows, exterior wall penetrating multi-mode HVAC units, hot and cold containment segregation structure, redundant data center roofing system, multi-system power containers, data center infrastructure management system (DCIM).

Sigma Designs Company Profile

Sigma Designs, Inc. is a provider of global integrated semiconductor solutions. The Company offers media platforms for use in the home entertainment and home control markets. The Company sells its products into markets, including smart television, media connectivity, set-top box and Internet of Things (IoT) devices. The Company’s media processor product line consists of a range of functionally similar platforms that are based on integrated chips, embedded software and hardware reference designs. The Company’s media connectivity product line consists of wired home networking controller chipsets that are designed to provide connectivity solutions between various home entertainment products and incoming video streams. The Company’s IoT devices product line consists of its wireless Z-Wave chips and modules. The Company is engaged in the license of its internally developed intellectual property. It also offers legacy products that are sold into prosumer and other industrial applications.

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