Critical Comparison: Aehr Test Systems (NASDAQ:AEHR) & AXT (NASDAQ:AXTI)

AXT (NASDAQ:AXTI) and Aehr Test Systems (NASDAQ:AEHR) are both mid-cap technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Volatility and Risk

AXT has a beta of 1.92, indicating that its stock price is 92% more volatile than the S&P 500. Comparatively, Aehr Test Systems has a beta of 3.06, indicating that its stock price is 206% more volatile than the S&P 500.

Institutional & Insider Ownership

49.5% of AXT shares are owned by institutional investors. Comparatively, 69.7% of Aehr Test Systems shares are owned by institutional investors. 6.0% of AXT shares are owned by insiders. Comparatively, 4.6% of Aehr Test Systems shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and price targets for AXT and Aehr Test Systems, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AXT	1	1	3	1	2.67
Aehr Test Systems	1	1	5	1	2.75

AXT presently has a consensus price target of $77.00, indicating a potential upside of 13.68%. Aehr Test Systems has a consensus price target of $132.50, indicating a potential upside of 46.01%. Given Aehr Test Systems’ stronger consensus rating and higher possible upside, analysts clearly believe Aehr Test Systems is more favorable than AXT.

Profitability

This table compares AXT and Aehr Test Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AXT	3.23%	0.96%	0.70%
Aehr Test Systems	-14.25%	-3.83%	-3.36%

Earnings and Valuation

This table compares AXT and Aehr Test Systems”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AXT	$88.33 million	50.28	-$21.26 million	$0.02	3,386.70
Aehr Test Systems	$50.00 million	59.28	-$7.13 million	($0.24)	-378.12

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

About AXT

AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. The company offers indium phosphide for use in data center connectivity using light/lasers, high-speed data transfer in data centers, 5G communications, fiber optic lasers and detectors, consumer devices, passive optical networks, silicon photonics, photonic integrated circuits, thermo-photovoltaics, RF amplifier and switching, infrared light-emitting diode (LEDS) motion control, lidar for robotics and autonomous vehicles, and infrared thermal imaging. It also provides semi-insulating gallium arsenide (GaAs) substrates for use in Wi-Fi and IoT devices, transistors, direct broadcast television, power amplifiers, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in LEDs, screen displays using micro-LEDs, printer head lasers and LEDs, 3-D sensing using VCSELs, data center communication using VCSELs, sensors for industrial robotics/near-infrared sensors, optical couplers, solar cells, night vision goggles, lidar for robotics and autonomous vehicles, and other lasers, as well as laser machining, cutting, and drilling. In addition, the company offers germanium substrates for use in multi-junction solar cells for satellites, optical sensors and detectors, terrestrial concentrated photo voltaic cells, infrared detectors, and carrier wafer for LED. Further, it provides 6N+ and 7N+ purified gallium, boron trioxide, gallium-magnesium alloy, pyrolytic boron nitride (pBN) crucibles, and pBN insulating parts. It sells its products through direct salesforce in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was incorporated in 1986 and is headquartered in Fremont, California.

About Aehr Test Systems

Aehr Test Systems provides test solutions for testing, burning-in, and semiconductor devices in wafer level, singulated die, and package part form, and installed systems worldwide. Its product portfolio includes FOX-XP and FOX-NP systems that are full wafer contact and singulated die/module test and burn-in systems that can test, burn-in, and stabilize range of devices, including silicon carbide-based and other power semiconductors, 2D and 3D sensors used in mobile phones, tablets and other computing devices, memory semiconductors, processors, microcontrollers, systems-on-a-chip, and photonics and integrated optical devices. The company also offers FOX-CP system, a low-cost single-wafer compact test solution for logic, memory, and photonic devices; FOX WaferPak Contactor, a full wafer contactor capable of testing wafers up to 300mm that enables integrated circuit manufacturers to perform test, burn-in, and stabilization of full wafers on the FOX-P systems. In addition, it provides FOX DiePak Carrier, a reusable temporary package that enables IC manufacturers to perform final test and burn-in of bare die and modules; and FOX DiePak Loader. The company was incorporated in 1977 and is headquartered in Fremont, California.