Reviewing AXT (NASDAQ:AXTI) and GCT Semiconductor (NYSE:GCTS)

GCT Semiconductor (NYSE:GCTS) and AXT (NASDAQ:AXTI) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, risk, institutional ownership and dividends.

Institutional & Insider Ownership

28.1% of GCT Semiconductor shares are owned by institutional investors. Comparatively, 49.5% of AXT shares are owned by institutional investors. 5.4% of GCT Semiconductor shares are owned by company insiders. Comparatively, 8.8% of AXT shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GCT Semiconductor	$9.13 million	7.79	-$12.38 million	($0.77)	-1.62
AXT	$99.36 million	14.91	-$11.62 million	($0.52)	-51.54

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for GCT Semiconductor and AXT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GCT Semiconductor	2	0	2	0	2.00
AXT	1	2	2	0	2.20

GCT Semiconductor currently has a consensus target price of $3.50, indicating a potential upside of 181.12%. AXT has a consensus target price of $13.75, indicating a potential downside of 48.69%. Given GCT Semiconductor’s higher probable upside, research analysts clearly believe GCT Semiconductor is more favorable than AXT.

Volatility and Risk

GCT Semiconductor has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500. Comparatively, AXT has a beta of 1.96, suggesting that its stock price is 96% more volatile than the S&P 500.

Profitability

This table compares GCT Semiconductor and AXT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GCT Semiconductor	-1,010.20%	N/A	-198.45%
AXT	-25.22%	-11.19%	-6.83%

Summary

AXT beats GCT Semiconductor on 10 of the 13 factors compared between the two stocks.

About GCT Semiconductor

GCT Semiconductor Holding, Inc., operates as a fabless semiconductor company, designs, develops, and markets integrated circuits for the wireless semiconductor industry. The company provides RF and modem chipsets based on 4G LTE technology, including 4G LTE, 4.5G LTE Advanced, and 4.75G LTE Advanced-Pro. It also develops and sells cellular IoT chipsets for low-speed mobile networks such as eMTC/NB-IOT/Sigfox, and other network protocols; and 5G solutions. Its products and solutions are used in smartphones, tablets, hotspots, CPEs, USB dongles, routers, and M2M applications. The company sells its products directly or indirectly through distributors to original equipment manufacturers and original design manufacturers primarily in Taiwan, China, Korea and Japan, Europe, North America and South America. The company was formerly known as Global Communication Technology, Inc. GCT Semiconductor Holding, Inc. was founded in 1998 and is headquartered in San Jose, California.

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.