Contrasting Allegro MicroSystems (NASDAQ:ALGM) & Qualcomm (NASDAQ:QCOM)

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Qualcomm and Allegro MicroSystems, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Qualcomm	3	9	11	1	2.42
Allegro MicroSystems	1	1	10	0	2.75

Qualcomm currently has a consensus target price of $168.00, indicating a potential upside of 30.57%. Allegro MicroSystems has a consensus target price of $45.00, indicating a potential upside of 38.12%. Given Allegro MicroSystems’ stronger consensus rating and higher possible upside, analysts clearly believe Allegro MicroSystems is more favorable than Qualcomm.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Qualcomm	11.96%	44.09%	20.50%
Allegro MicroSystems	-1.57%	4.35%	2.92%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Qualcomm	$44.28 billion	3.10	$5.54 billion	$4.84	26.58
Allegro MicroSystems	$725.01 million	8.33	-$73.01 million	($0.08)	-407.25

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

Volatility and Risk

Qualcomm has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500. Comparatively, Allegro MicroSystems has a beta of 1.64, suggesting that its share price is 64% more volatile than the S&P 500.

Insider and Institutional Ownership

74.4% of Qualcomm shares are held by institutional investors. Comparatively, 56.5% of Allegro MicroSystems shares are held by institutional investors. 0.1% of Qualcomm shares are held by company insiders. Comparatively, 0.4% of Allegro MicroSystems shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Qualcomm beats Allegro MicroSystems on 10 of the 15 factors compared between the two stocks.

About Qualcomm

Qualcomm Incorporated engages in the development and commercialization of foundational technologies for the wireless industry worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies for use in wireless voice and data communications, networking, computing, multimedia, and position location products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of wireless products comprising products implementing CDMA2000, WCDMA, LTE and/or OFDMA-based 5G standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including 5G, artificial intelligence, automotive, consumer, enterprise, cloud, IoT, and extended reality, and investments, including non-marketable equity securities and, to a lesser extent, marketable equity securities, and convertible debt instruments. It also provides development, and other services and related products to the United States government agencies and their contractors. The company was incorporated in 1985 and is headquartered in San Diego, California.

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.