Critical Review: Broadcom (NASDAQ:AVGO) versus SCI Engineered Materials (OTCMKTS:SCIA)

Broadcom (NASDAQ:AVGO) and SCI Engineered Materials (OTCMKTS:SCIA) are both computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Profitability

This table compares Broadcom and SCI Engineered Materials’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Broadcom	31.59%	36.60%	15.52%
SCI Engineered Materials	9.13%	11.23%	9.05%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Broadcom and SCI Engineered Materials, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Broadcom	0	1	29	3	3.06
SCI Engineered Materials	0	0	0	0	0.00

Broadcom currently has a consensus target price of $356.48, indicating a potential upside of 6.06%. Given Broadcom’s stronger consensus rating and higher possible upside, equities analysts clearly believe Broadcom is more favorable than SCI Engineered Materials.

Earnings and Valuation

This table compares Broadcom and SCI Engineered Materials”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Broadcom	$51.57 billion	30.77	$5.90 billion	$3.92	85.74
SCI Engineered Materials	$22.87 million	0.84	$1.86 million	$0.32	13.06

Broadcom has higher revenue and earnings than SCI Engineered Materials. SCI Engineered Materials is trading at a lower price-to-earnings ratio than Broadcom, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

76.4% of Broadcom shares are held by institutional investors. Comparatively, 27.6% of SCI Engineered Materials shares are held by institutional investors. 2.0% of Broadcom shares are held by insiders. Comparatively, 19.7% of SCI Engineered Materials shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Broadcom has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500. Comparatively, SCI Engineered Materials has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500.

Summary

Broadcom beats SCI Engineered Materials on 14 of the 15 factors compared between the two stocks.

About Broadcom

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices. The company also offers RF front end modules and filter; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; inductive charging; attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.

About SCI Engineered Materials

SCI Engineered Materials, Inc. engages in the manufacture and supply of materials for physical vapor deposition thin film applications in the United States. It offers ceramic targets, metal sputtering targets, and backing plates for use in semiconductors, thin film solar, flat panel displays, defense, aerospace, and photonics industries. The company’s materials are used to produce nano layers of metals and oxides for advanced material systems; and in applying decorative coatings for end uses, such as sink faucets to produce various electronic, photonic, and semiconductor products. It serves domestic and multi-national corporations, universities, and research institutions. The company was formerly known as Superconductive Components, Inc. and changed its name to SCI Engineered Materials, Inc. in 2007. SCI Engineered Materials, Inc. was incorporated in 1987 and is headquartered in Columbus, Ohio.