Analyzing AXT (NASDAQ:AXTI) and GlobalFoundries (NASDAQ:GFS)

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

Insider & Institutional Ownership

49.5% of AXT shares are held by institutional investors. 8.8% of AXT shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AXT	-27.68%	-11.38%	-7.02%
GlobalFoundries	-1.68%	6.55%	4.32%

Valuation & Earnings

This table compares AXT and GlobalFoundries”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AXT	$99.36 million	2.24	-$11.62 million	($0.55)	-8.78
GlobalFoundries	$6.75 billion	2.72	-$265.00 million	($0.21)	-157.86

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

Volatility and Risk

AXT has a beta of 2.1, indicating that its share price is 110% more volatile than the S&P 500. Comparatively, GlobalFoundries has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for AXT and GlobalFoundries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AXT	0	0	4	0	3.00
GlobalFoundries	0	8	6	0	2.43

AXT currently has a consensus price target of $4.60, suggesting a potential downside of 4.76%. GlobalFoundries has a consensus price target of $43.79, suggesting a potential upside of 32.08%. Given GlobalFoundries’ higher possible upside, analysts plainly believe GlobalFoundries is more favorable than AXT.

Summary

GlobalFoundries beats AXT on 8 of the 14 factors compared between 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 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.