Microchip Technology (NASDAQ:MCHP) vs. Texas Instruments (NASDAQ:TXN) Head-To-Head Comparison

Microchip Technology (NASDAQ:MCHP) and Texas Instruments (NASDAQ:TXN) are both large-cap computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.

Profitability

This table compares Microchip Technology and Texas Instruments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Microchip Technology 12.23% 24.31% 7.67%
Texas Instruments 36.83% 60.61% 28.50%

Dividends

Microchip Technology pays an annual dividend of $1.47 per share and has a dividend yield of 1.4%. Texas Instruments pays an annual dividend of $3.60 per share and has a dividend yield of 2.6%. Microchip Technology pays out 28.4% of its earnings in the form of a dividend. Texas Instruments pays out 68.7% 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. Microchip Technology has increased its dividend for 17 consecutive years and Texas Instruments has increased its dividend for 16 consecutive years.

Analyst Ratings

This is a summary of current ratings and target prices for Microchip Technology and Texas Instruments, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Microchip Technology 0 4 18 1 2.87
Texas Instruments 4 11 10 0 2.24

Microchip Technology presently has a consensus price target of $115.14, indicating a potential upside of 11.18%. Texas Instruments has a consensus price target of $133.83, indicating a potential downside of 4.19%. Given Microchip Technology’s stronger consensus rating and higher probable upside, equities analysts clearly believe Microchip Technology is more favorable than Texas Instruments.

Volatility & Risk

Microchip Technology has a beta of 1.6, suggesting that its share price is 60% more volatile than the S&P 500. Comparatively, Texas Instruments has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Valuation and Earnings

This table compares Microchip Technology and Texas Instruments’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Microchip Technology $5.27 billion 4.96 $570.60 million $5.18 19.99
Texas Instruments $14.38 billion 8.90 $5.02 billion $5.24 26.66

Texas Instruments has higher revenue and earnings than Microchip Technology. Microchip Technology is trading at a lower price-to-earnings ratio than Texas Instruments, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

98.2% of Microchip Technology shares are owned by institutional investors. Comparatively, 82.9% of Texas Instruments shares are owned by institutional investors. 2.2% of Microchip Technology shares are owned by company insiders. Comparatively, 0.7% of Texas Instruments shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Microchip Technology beats Texas Instruments on 10 of the 18 factors compared between the two stocks.

Microchip Technology Company Profile

Microchip Technology Incorporated develops, manufactures, and sells semiconductor products for various embedded control applications. The company offers general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers; 32-bit microprocessors; and microcontrollers for automotive networking, computing, lighting, power supplies, motor control, human machine interface, security, wired connectivity, and wireless connectivity. It also provides development tools that enable system designers to program microcontroller products for specific applications; analog, interface, mixed signal, and timing products comprising power management, linear, mixed-signal, high-voltage, thermal management, radio frequency (RF), drivers, safety, security, timing, USB, Ethernet, wireless, and other interface products; and memory products consisting of serial electrically erasable programmable read-only memory, serial flash memories, parallel flash memories, and serial static random access memories for the production of very small footprint devices. In addition, the company licenses its SuperFlash embedded flash and Smartbits one time programmable NVM technologies to foundries, integrated device manufacturers, and design partners for use in the manufacture of microcontroller products, gate array, RF, and analog products that require embedded non-volatile memory, as well as provides engineering services. Further, it provides wafer foundry and assembly and test subcontracting manufacturing services; and application specific integrated circuits, complex programmable logic devices, and aerospace products. It serves automotive, communications, computing, consumer, aerospace, defense, safety, security, medical, and industrial control markets. The company sells its products through a network of direct sales personnel and distributors in the Americas, Europe, and Asia. Microchip Technology Incorporated was founded in 1989 and is headquartered in Chandler, Arizona.

Texas Instruments Company Profile

Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide. It operates in two segments, Analog and Embedded Processing. The Analog segment offers power products to manage power requirements in various levels using battery management solutions, portable components, power supply controls, point-of-load products, switches and interfaces, integrated protection devices, high-voltage products, and mobile lighting and display products. This segment also provides signal chain products that sense, condition, and measure signals to allow information to be transferred or converted for further processing and control for use in amplifier, data converter, interface product, motor drive, clock, and sensing product end-markets; and integrated analog and standard products, which are primarily for sale into personal electronics, industrial, and automotive markets. The Embedded Processing segment offers connected microcontrollers, such as microcontrollers, microcontrollers with integrated wireless capabilities, and stand-alone wireless connectivity solutions that are used in electronic equipment to sense, connect, log, and transfer data; digital signal processors for mathematical computations; and applications processors for specific computing activity. This segment offers products for use in various markets, principally industrial and automotive. The company also provides DLP products, primarily for use in projectors to create high-definition images; calculators; and application-specific integrated circuits. Texas Instruments Incorporated markets and sells its semiconductor products through direct sales and distributors, as well as online. The company was founded in 1930 and is headquartered in Dallas, Texas.

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