Head to Head Survey: United Microelectronics Corporation (UMC) vs. Silicon Motion Technology Corporation (SIMO)

United Microelectronics Corporation (NYSE: UMC) and Silicon Motion Technology Corporation (NASDAQ:SIMO) are both semiconductors – nec companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, institutional ownership, analyst recommendations and risk.

Institutional and Insider Ownership

5.2% of United Microelectronics Corporation shares are held by institutional investors. Comparatively, 79.5% of Silicon Motion Technology Corporation shares are held by institutional investors. 8.0% of United Microelectronics Corporation 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.

Risk & Volatility

United Microelectronics Corporation has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500. Comparatively, Silicon Motion Technology Corporation has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500.

Earnings and Valuation

This table compares United Microelectronics Corporation and Silicon Motion Technology Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
United Microelectronics Corporation $4.59 billion 1.38 $266.08 million $0.13 19.92
Silicon Motion Technology Corporation $556.15 million 3.04 $110.94 million $2.56 18.69

United Microelectronics Corporation has higher revenue and earnings than Silicon Motion Technology Corporation. Silicon Motion Technology Corporation is trading at a lower price-to-earnings ratio than United Microelectronics Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

United Microelectronics Corporation pays an annual dividend of $0.06 per share and has a dividend yield of 2.3%. Silicon Motion Technology Corporation pays an annual dividend of $0.89 per share and has a dividend yield of 1.9%. United Microelectronics Corporation pays out 46.2% of its earnings in the form of a dividend. Silicon Motion Technology Corporation pays out 34.8% 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.

Analyst Ratings

This is a summary of current recommendations and price targets for United Microelectronics Corporation and Silicon Motion Technology Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Microelectronics Corporation 8 0 0 0 1.00
Silicon Motion Technology Corporation 0 3 10 0 2.77

United Microelectronics Corporation currently has a consensus target price of $2.10, suggesting a potential downside of 18.92%. Silicon Motion Technology Corporation has a consensus target price of $57.67, suggesting a potential upside of 20.54%. Given Silicon Motion Technology Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Silicon Motion Technology Corporation is more favorable than United Microelectronics Corporation.

Profitability

This table compares United Microelectronics Corporation and Silicon Motion Technology Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Microelectronics Corporation 6.90% 4.87% 2.73%
Silicon Motion Technology Corporation 17.18% 19.58% 14.98%

Summary

Silicon Motion Technology Corporation beats United Microelectronics Corporation on 11 of the 16 factors compared between the two stocks.

About United Microelectronics Corporation

United Microelectronics Corporation is a global semiconductor foundry. The Company provides integrated circuit (IC) production for applications spanning every sector of the electronics industry. The Company operates through two segments: wafer fabrication and new business. The primary operating activity of the Company’s wafer fabrication segment is the manufacture of chips to the design specifications of its customers by using its own processes and techniques. The new business segment primarily includes researching, developing, manufacturing, and providing solar energy and new generation light-emitting diode (LED). The Company maintains a customer base across various industries, including communication, consumer electronics, computer, memory and others, while focusing on manufacturing for applications, including networking, telecommunications, Internet, multimedia, personal computers (PCs) and graphics.

About Silicon Motion Technology Corporation

Silicon Motion Technology Corporation is a fabless semiconductor company. The Company designs, develops and markets low-power semiconductor solutions to original equipment manufacturers (OEMs) and other customers in the mobile storage and mobile communications markets. It is engaged in developing negative-AND (NAND) flash controller integrated circuits (ICs) for solid-state storage devices and specialty radio frequency (RF) ICs for mobile devices. In the mobile storage market, the Company’s products are controllers used in embedded storage products, such as Solid State Drives (SSDs), and Embedded Multimedia Cards (eMMCs), as well as expandable storage products, such as flash memory cards and universal serial bus (USB) flash drives. For the mobile communications market, the Company’s products are handset transceivers and mobile television (TV) System on Chips (SoCs). The Company’s products are used in devices, such as smartphones, tablets and personal computers (PCs).

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