Applied Materials (NASDAQ:AMAT) & Allegro MicroSystems (NASDAQ:ALGM) Head-To-Head Analysis

Allegro MicroSystems (NASDAQ:ALGM) and Applied Materials (NASDAQ:AMAT) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.

Insider and Institutional Ownership

56.5% of Allegro MicroSystems shares are owned by institutional investors. Comparatively, 80.6% of Applied Materials shares are owned by institutional investors. 0.4% of Allegro MicroSystems shares are owned by company insiders. Comparatively, 0.2% of Applied Materials shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Allegro MicroSystems and Applied Materials’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Allegro MicroSystems	-9.00%	2.09%	1.36%
Applied Materials	23.88%	40.96%	22.99%

Analyst Recommendations

This is a summary of current ratings and price targets for Allegro MicroSystems and Applied Materials, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allegro MicroSystems	1	2	9	0	2.67
Applied Materials	0	14	20	0	2.59

Allegro MicroSystems presently has a consensus price target of $39.00, suggesting a potential upside of 51.05%. Applied Materials has a consensus price target of $228.04, suggesting a potential downside of 8.77%. Given Allegro MicroSystems’ stronger consensus rating and higher probable upside, equities analysts plainly believe Allegro MicroSystems is more favorable than Applied Materials.

Risk and Volatility

Allegro MicroSystems has a beta of 1.72, suggesting that its share price is 72% more volatile than the S&P 500. Comparatively, Applied Materials has a beta of 1.84, suggesting that its share price is 84% more volatile than the S&P 500.

Earnings and Valuation

This table compares Allegro MicroSystems and Applied Materials”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Allegro MicroSystems	$788.40 million	6.06	-$73.01 million	($0.16)	-161.38
Applied Materials	$28.37 billion	7.02	$7.18 billion	$8.68	28.80

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

Summary

Applied Materials beats Allegro MicroSystems on 11 of the 14 factors compared between the two stocks.

About Allegro MicroSystems

Allegro MicroSystems, Inc., together with its subsidiaries, designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; and power ICs comprising motor driver ICs, regulator and LED driver ICs, and isolated gate drivers. The company sells its products to original equipment manufacturers and distributors primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment. It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets. The company was founded in 1990 and is headquartered in Manchester, New Hampshire. Allegro MicroSystems, Inc. is a subsidiary of Sanken Electric Co., Ltd.

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.