Head-To-Head Review: Broadcom (NASDAQ:AVGO) and Canaan (NASDAQ:CAN)

Broadcom (NASDAQ:AVGO) and Canaan (NASDAQ:CAN) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, risk, dividends, analyst recommendations, institutional ownership and earnings.

Volatility and Risk

Broadcom has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500. Comparatively, Canaan has a beta of 3.39, suggesting that its stock price is 239% more volatile than the S&P 500.

Valuation & Earnings

This table compares Broadcom and Canaan”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Broadcom	$54.53 billion	16.75	$5.90 billion	$2.08	93.38
Canaan	$229.63 million	1.31	-$414.15 million	($1.35)	-0.79

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

Profitability

This table compares Broadcom and Canaan’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Broadcom	11.43%	28.00%	11.16%
Canaan	-128.85%	-60.37%	-42.71%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Broadcom and Canaan, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Broadcom	0	2	25	0	2.93
Canaan	0	1	3	0	2.75

Broadcom presently has a consensus target price of $231.48, suggesting a potential upside of 19.18%. Canaan has a consensus target price of $4.33, suggesting a potential upside of 304.98%. Given Canaan’s higher probable upside, analysts plainly believe Canaan is more favorable than Broadcom.

Insider & Institutional Ownership

76.4% of Broadcom shares are held by institutional investors. Comparatively, 70.1% of Canaan shares are held by institutional investors. 2.0% of Broadcom shares are held by insiders. Comparatively, 0.3% of Canaan shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Broadcom beats Canaan on 12 of the 14 factors compared between the two stocks.

About Broadcom

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices. The company also offers RF front end modules and filter; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; inductive charging; attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.

About Canaan

Canaan Inc. engages in the research, design, and sale of integrated circuit (IC) final mining equipment products by integrating IC products for bitcoin mining and related components in the People's Republic of China. It is also involved in the assembly and distribution of mining equipment and spare parts. The company has operations in the United States, Australia, Kazakhstan, Hong Kong, Canada, Mainland China, Thailand, Sweden, and internationally. Canaan Inc. was founded in 2013 and is based in Singapore.