Analyzing Infineon Technologies (OTCMKTS:IFNNY) & Applied Materials (NASDAQ:AMAT)

Applied Materials (NASDAQ:AMAT) and Infineon Technologies (OTCMKTS:IFNNY) are both large-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, earnings and institutional ownership.

Insider & Institutional Ownership

80.6% of Applied Materials shares are held by institutional investors. Comparatively, 0.2% of Infineon Technologies shares are held by institutional investors. 0.2% of Applied Materials shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Applied Materials has a beta of 1.77, meaning that its stock price is 77% more volatile than the S&P 500. Comparatively, Infineon Technologies has a beta of 1.84, meaning that its stock price is 84% more volatile than the S&P 500.

Valuation and Earnings

This table compares Applied Materials and Infineon Technologies”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Materials	$27.18 billion	5.98	$7.18 billion	$8.39	24.31
Infineon Technologies	$16.22 billion	3.06	$1.41 billion	$0.57	66.74

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Applied Materials and Infineon Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Materials	1	12	17	0	2.53
Infineon Technologies	0	1	0	3	3.50

Applied Materials currently has a consensus target price of $194.15, suggesting a potential downside of 4.79%. Given Applied Materials’ higher probable upside, equities research analysts plainly believe Applied Materials is more favorable than Infineon Technologies.

Profitability

This table compares Applied Materials and Infineon Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Applied Materials	23.88%	40.96%	22.99%
Infineon Technologies	4.77%	11.63%	6.99%

Dividends

Applied Materials pays an annual dividend of $1.84 per share and has a dividend yield of 0.9%. Infineon Technologies pays an annual dividend of $0.25 per share and has a dividend yield of 0.7%. Applied Materials pays out 21.9% of its earnings in the form of a dividend. Infineon Technologies pays out 43.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Applied Materials has increased its dividend for 8 consecutive years. Applied Materials is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Applied Materials beats Infineon Technologies on 14 of the 18 factors compared between the two stocks.

About Applied Materials

Applied Materials, Inc. engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices. It operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. The company was incorporated in 1967 and is headquartered in Santa Clara, California.

About Infineon Technologies

Infineon Technologies AG designs, develops, manufactures, and markets semiconductors and semiconductor-based solutions worldwide. Its Automotive segment offers automotive microcontrollers; 3D ToF, magnetic, and pressure sensors; discrete power semiconductors; IGBT modules; industrial microcontrollers; power and memory ICs; transceivers; diodes, MOSEFTs, and modules; and voltage regulators for use in assistance and safety systems, comfort electronics, infotainment, powertrain, and security products. The company’s Green Industrial Power segment provides bare dies, discrete IGBTs, and driver ICs; SiC diodes, MOSFETs, and modules; and IGBT modules for home appliances, industrial drives, industrial power supplies, industrial robotics, industrial vehicles, and traction, as well as for energy generation, storage, and transmission. Its Power & Sensor Systems segment offers chips for gas and pressure sensors, and MEMS microphones; 3D ToF sensors; control ICs; discrete low-, mid-, and high-voltage power MOSFET; customized chips; GaN power switches; GPS low-noise amplifiers; low-voltage and high-voltage driver ICs; radar sensor ICs; RF antenna switches and power transistors; transient voltage suppressor diodes; SiC diode and MOSFETs; and USB controllers for use in audio amplifiers, automotive electronics, BLDC motors, cellular communications infrastructure, electric vehicle charging stations, human machine interaction, IoT, LED and conventional lighting systems, microinverter, mobile devices, power management, and special applications. The company’s Connected Secure Systems segment provides connectivity solutions, embedded security controllers, microcontrollers, and security controllers for authentication, automotive, consumer electronics, government identification document, IoT, mobile communication, payment system, ticketing, access control, and computing applications. Infineon Technologies AG was founded in 1999 and is headquartered in Neubiberg, Germany.