GlobalFoundries (NASDAQ:GFS) and Diodes (NASDAQ:DIOD) Critical Review

Diodes (NASDAQ:DIOD) and GlobalFoundries (NASDAQ:GFS) are both computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, earnings, analyst recommendations, institutional ownership and profitability.

Earnings & Valuation

This table compares Diodes and GlobalFoundries”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Diodes	$1.31 billion	1.70	$44.02 million	$0.55	87.51
GlobalFoundries	$6.75 billion	2.73	-$265.00 million	($0.34)	-98.15

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

Profitability

This table compares Diodes and GlobalFoundries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Diodes	1.90%	3.04%	2.39%
GlobalFoundries	-1.68%	6.60%	4.30%

Institutional and Insider Ownership

99.2% of Diodes shares are held by institutional investors. 1.9% of Diodes shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Diodes and GlobalFoundries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Diodes	0	1	2	1	3.00
GlobalFoundries	0	6	7	0	2.54

Diodes presently has a consensus price target of $55.00, suggesting a potential upside of 14.27%. GlobalFoundries has a consensus price target of $45.6923, suggesting a potential upside of 36.93%. Given GlobalFoundries’ higher probable upside, analysts clearly believe GlobalFoundries is more favorable than Diodes.

Risk & Volatility

Diodes has a beta of 1.47, suggesting that its share price is 47% more volatile than the S&P 500. Comparatively, GlobalFoundries has a beta of 1.5, suggesting that its share price is 50% more volatile than the S&P 500.

Summary

Diodes beats GlobalFoundries on 8 of the 15 factors compared between the two stocks.

About Diodes

Diodes Incorporated, together with its subsidiaries, manufactures and supplies application-specific standard products in the broad discrete, logic, analog, and mixed-signal semiconductor markets worldwide. The company offers discrete semiconductor products, such as MOSFETs, SiC MOSFETs; data line protection, power line protection, thyristers, USB Type-C protection, and transient voltage suppressors; Schottky, small signal switching, Zener, and SiC diodes; bridges, super barrier, Schottky, Schottky bridge, and fast/ultra-fast rectifiers; and bipolar, avalanche, gate driver, and pre-bias transistors. It also provides analog products, including power management devices comprising AC-DC and DC-DC converters, USB power switches, low dropout, photocoupler and linear voltage regulators; standard linear devices consisting of operational amplifiers and comparators, current monitors, voltage references, and reset generators; LED lighting drivers; audio amplifiers; and sensor products, such as hall-effect sensors and motor drivers. In addition, the company offers mixed-signal products, such as high speed mux/demux, digital switches, interface, redrivers, universal level shifters/voltage translators, clock ICs and packet switches; standard logic products comprising low-voltage complementary metal-oxide-semiconductor (CMOS) and advanced high-speed CMOS devices; ultra-low power CMOS logic; and analog switches; multichip products and co-packaged discrete, analog and mixed-signal silicon in miniature packages; and silicon and silicon epitaxial wafers used in manufacturing frequency control products and contact images sensors. It serves the industrial, automotive, computing, communications, and consumer markets through direct sales, marketing personnel, independent sales representatives, and distributors. The company was incorporated in 1959 and is headquartered in Plano, Texas.

About GlobalFoundries

GlobalFoundries Inc., a semiconductor foundry, provides range of mainstream wafer fabrication services and technologies worldwide. It manufactures various semiconductor devices, including microprocessors, mobile application processors, baseband processors, network processors, radio frequency modems, microcontrollers, and power management units. GlobalFoundries Inc. has a strategic partnership with Efficient Computer to develop high-performance computer processors. The company was incorporated in 2008 and is headquartered in Malta, New York.