Critical Analysis: Avnet (NASDAQ:AVT) & NeoMagic (OTCMKTS:NMGC)

NeoMagic (OTCMKTS:NMGC) and Avnet (NASDAQ:AVT) are both technology companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Profitability

This table compares NeoMagic and Avnet’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NeoMagic	N/A	N/A	N/A
Avnet	1.21%	9.57%	3.47%

Insider and Institutional Ownership

95.8% of Avnet shares are held by institutional investors. 12.7% of NeoMagic shares are held by insiders. Comparatively, 1.9% of Avnet shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for NeoMagic and Avnet, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NeoMagic	0	0	0	0	0.00
Avnet	1	1	2	2	2.83

Avnet has a consensus price target of $93.25, suggesting a potential upside of 5.53%. Given Avnet’s stronger consensus rating and higher probable upside, analysts plainly believe Avnet is more favorable than NeoMagic.

Earnings and Valuation

This table compares NeoMagic and Avnet”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NeoMagic	N/A	N/A	N/A	N/A	N/A
Avnet	$27.63 billion	0.26	$334.39 million	$3.99	22.15

Avnet has higher revenue and earnings than NeoMagic.

Volatility and Risk

NeoMagic has a beta of -0.24, suggesting that its stock price is 124% less volatile than the S&P 500. Comparatively, Avnet has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500.

Summary

Avnet beats NeoMagic on 10 of the 11 factors compared between the two stocks.

About NeoMagic

NeoMagic Corporation designs and delivers semiconductors and software solutions for video, television, imaging, graphic, and audio devices. It offers microcontrollers; horizon digital picture frame and digital mobile TV solutions; and SOC processors, such as application processors and Neomobile TV solutions. The company, through its MercadoMagico.com division, operates an e-Commerce platform that allows user to buy and sell products from one another or buy premium electronic products. It sells its applications processors under the MiMagic brand name. The company was founded in 1993 and is based in Milpitas, California.

About Avnet

Avnet, Inc., distributes electronic component technology. The company operates through two segments, Electronic Components and Farnell. The Electronic Components segment markets, sells, and distributes semiconductors; interconnect, passive, and electromechanical components; and other integrated components from electronic component manufacturers. It also offers design chain support that provides engineers with technical design solutions; engineering and technical resources to support product design, bill of materials development, and technical education and training; and supply chain solutions that provide support and logistical services to original equipment manufacturers, electronic manufacturing service providers, and electronic component manufacturers. In addition, this segment provides embedded solutions, such as technical design, integration, and assembly of embedded products, systems, and solutions primarily for industrial applications, as well as embedded display solutions comprising touch and passive displays; and develops and manufactures standard board and industrial subsystems, and application-specific devices that enable it to produce systems tailored to specific customer requirements. This segment serves various markets, such as automotive, medical, defense, aerospace, telecommunications, industrial, and digital editing. The Farnell segment distributes kits, tools, and electronic and industrial automation components, as well as test and measurement products to engineers and entrepreneurs. It has operations in the Americas, Europe, the Middle East, Africa, and Asia. Avnet, Inc. was founded in 1921 and is headquartered in Phoenix, Arizona.