Contrasting Ambarella (AMBA) & Diodes (DIOD)

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Ambarella and Diodes, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ambarella 0 6 6 0 2.50
Diodes 1 3 1 0 2.00

Ambarella currently has a consensus price target of $58.50, indicating a potential upside of 2.67%. Diodes has a consensus price target of $34.50, indicating a potential upside of 10.19%. Given Diodes’ higher probable upside, analysts plainly believe Diodes is more favorable than Ambarella.

Profitability

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

Net Margins Return on Equity Return on Assets
Ambarella 16.45% 11.94% 10.55%
Diodes 2.96% 6.44% 3.57%

Insider & Institutional Ownership

59.9% of Ambarella shares are owned by institutional investors. Comparatively, 74.2% of Diodes shares are owned by institutional investors. 5.8% of Ambarella shares are owned by insiders. Comparatively, 7.0% of Diodes shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Ambarella and Diodes’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Ambarella $310.30 million 6.10 $57.81 million $1.54 37.00
Diodes $942.16 million 1.64 $15.93 million $0.60 52.18

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

Volatility & Risk

Ambarella has a beta of 1.59, suggesting that its share price is 59% more volatile than the S&P 500. Comparatively, Diodes has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500.

Summary

Ambarella beats Diodes on 10 of the 14 factors compared between the two stocks.

About Ambarella

Ambarella, Inc. offers semiconductor processing solutions for video that enable high-definition (HD), video capture, sharing and display. The Company operates through the development and sale of low-power, high-definition video products segment. Its system-on-a-chip designs incorporate HD video processing, image processing, audio processing and system functions onto a single chip. In the camera market, its platform enables the creation of video content in wearable cameras, automotive aftermarket cameras, professional and consumer Internet Protocol (IP), security cameras, telepresence cameras and unmanned aerial vehicles. In the infrastructure market, its solutions manage IP video traffic, broadcast encoding and transcoding, and IP video delivery applications. AmbaClear is its image signal processing architecture. AmbaCast is its HD video processing architecture. It offers the MotorVu 3D 360 degrees Surround View reference design for automotive original equipment manufacturer market.

About Diodes

Diodes Incorporated is a manufacturer and supplier of application-specific standard products within the discrete, logic, analog and mixed-signal semiconductor markets, serving the consumer electronics, computing, communications, industrial and automotive markets. The Company’s products include diodes; rectifiers; transistors; metal-oxide semiconductor field-effect transistors (MOSFETs); protection devices; amplifiers and comparators; Hall-effect and temperature sensors, and power management devices, including light emitting diode (LED) drivers, alternating current (AC)-direct current (DC) and DC-DC switching, linear voltage regulators and voltage references, along with special function devices, such as universal serial bus (USB) power switches, load switches, voltage supervisors and motor controllers. It also holds interests in Pericom Semiconductor Corporation, which designs, develops and markets integrated circuits (ICs) and frequency control products (FCPs).

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