Critical Analysis: AXT (NASDAQ:AXTI) & Credo Technology Group (NASDAQ:CRDO)

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

Profitability

This table compares AXT and Credo Technology Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AXT	-27.68%	-11.38%	-7.02%
Credo Technology Group	20.85%	19.02%	16.40%

Valuation & Earnings

This table compares AXT and Credo Technology Group”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	2.16	-$11.62 million	($0.55)	-8.47
Credo Technology Group	$436.77 million	56.61	$52.18 million	$0.67	213.33

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

Volatility and Risk

AXT has a beta of 2.1, suggesting that its share price is 110% more volatile than the S&P 500. Comparatively, Credo Technology Group has a beta of 2.59, suggesting that its share price is 159% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for AXT and Credo Technology Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AXT	0	0	4	0	3.00
Credo Technology Group	0	0	13	2	3.13

AXT presently has a consensus price target of $4.60, indicating a potential downside of 1.29%. Credo Technology Group has a consensus price target of $126.27, indicating a potential downside of 11.65%. Given AXT’s higher probable upside, analysts clearly believe AXT is more favorable than Credo Technology Group.

Institutional and Insider Ownership

49.5% of AXT shares are held by institutional investors. Comparatively, 80.5% of Credo Technology Group shares are held by institutional investors. 8.8% of AXT shares are held by insiders. Comparatively, 11.8% of Credo Technology Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Credo Technology Group beats AXT on 14 of the 15 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 Credo Technology Group

Credo Technology Group Holding Ltd provides various high-speed connectivity Credo Technology Group Holding Ltd provides various high-speed connectivity solutions for optical and electrical Ethernet applications in the United States, Taiwan, Mainland China, Hong Kong, and internationally. Its products include HiWire active electrical cables, optical digital signal processors, low-power line card PHY, serializer/deserializer (SerDes) chiplets, and SerDes IP, as well as integrated circuits, active electrical cables. The company also offers intellectual property solutions consist of SerDes IP licensing. It sells its products to hyperscalers, original equipment manufacturers, original design manufacturers and optical module manufacturers, as well as into the enterprise and HPC markets. The company was founded in 2008 and is based in Grand Cayman, Cayman Islands.