Financial Contrast: Switch (SWCH) and Sigma Designs (SIGM)

Switch (NYSE: SWCH) and Sigma Designs (NASDAQ:SIGM) are both servers & systems companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, risk, dividends, valuation, earnings, institutional ownership and profitability.

Institutional and Insider Ownership

60.8% of Sigma Designs shares are owned by institutional investors. 4.5% of Sigma Designs shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings for Switch and Sigma Designs, as reported by MarketBeat.com.

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 price target of $22.20, indicating a potential upside of 10.83%. Sigma Designs has a consensus price target of $7.50, indicating a potential upside of 27.12%. Given Sigma Designs’ higher possible upside, analysts clearly believe Sigma Designs is more favorable than Switch.

Earnings and Valuation

This table compares Switch and Sigma Designs’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Switch $318.35 million 15.59 $31.36 million $0.13 154.08
Sigma Designs $220.54 million 1.03 -$18.31 million ($0.94) -6.28

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

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 N/A N/A N/A
Sigma Designs -19.53% -18.73% -13.02%

Summary

Switch beats Sigma Designs on 9 of the 12 factors compared between the two stocks.

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).

About Sigma Designs

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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