Financial Analysis: Super Micro Computer (SMCI) & Switch (SWCH)

Super Micro Computer (NASDAQ: SMCI) and Switch (NYSE:SWCH) are both computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, profitability, risk, earnings, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Super Micro Computer and Switch, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Super Micro Computer 0 5 3 0 2.38
Switch 0 5 5 0 2.50

Super Micro Computer presently has a consensus price target of $30.17, indicating a potential upside of 51.21%. Switch has a consensus price target of $22.20, indicating a potential upside of 10.83%. Given Super Micro Computer’s higher probable upside, research analysts plainly believe Super Micro Computer is more favorable than Switch.

Earnings and Valuation

This table compares Super Micro Computer and Switch’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Super Micro Computer $2.53 billion 0.38 $69.32 million $1.34 14.89
Switch $318.35 million 15.59 $31.36 million $0.13 154.08

Super Micro Computer has higher revenue and earnings than Switch. Super Micro Computer is trading at a lower price-to-earnings ratio than Switch, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

77.0% of Super Micro Computer shares are owned by institutional investors. 24.0% of Super Micro Computer shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Super Micro Computer and Switch’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Super Micro Computer 2.74% 9.08% 5.08%
Switch N/A N/A N/A

Summary

Super Micro Computer beats Switch on 9 of the 12 factors compared between the two stocks.

About Super Micro Computer

Super Micro Computer, Inc. is engaged in developing and providing end-to-end green computing solutions to the cloud computing, data center, enterprise information technology (IT), big data, high performance computing (HPC) and Internet of Things (IoT)/embedded markets. The Company’s solutions range from server, storage, blade and workstations to full racks, networking devices, server management software and technology support and services. The Company sells its server systems and server subsystems and accessories through a combination of distributors, including value added resellers and system integrators, and other equipment manufacturers (OEMs). As of June 30, 2016, the Company offered over 4,950 stock keeping units (SKUs), including SKUs for server and storage systems, serverboards, chassis, power supplies and other system accessories. The Company develops and manufactures server solutions based upon a modular and open architecture.

About Switch

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).

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