Silicon Motion Technology (NASDAQ:SIMO) versus Advantest (OTCMKTS:ATEYY) Financial Analysis

Advantest (OTCMKTS:ATEYY) and Silicon Motion Technology (NASDAQ:SIMO) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, dividends, institutional ownership and risk.

Risk and Volatility

Advantest has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500. Comparatively, Silicon Motion Technology has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Dividends

Advantest pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. Silicon Motion Technology pays an annual dividend of $2.00 per share and has a dividend yield of 3.8%. Advantest pays out 13.1% of its earnings in the form of a dividend. Silicon Motion Technology pays out 74.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Earnings & Valuation

This table compares Advantest and Silicon Motion Technology”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advantest	$3.37 billion	11.38	$429.80 million	$1.22	42.61
Silicon Motion Technology	$803.55 million	2.18	$90.72 million	$2.69	19.37

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

Institutional and Insider Ownership

0.0% of Advantest shares are owned by institutional investors. Comparatively, 78.0% of Silicon Motion Technology shares are owned by institutional investors. 5.3% of Silicon Motion Technology shares are owned 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.

Profitability

This table compares Advantest and Silicon Motion Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Advantest	19.95%	29.15%	18.39%
Silicon Motion Technology	11.29%	11.63%	8.77%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Advantest and Silicon Motion Technology, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advantest	0	0	0	1	4.00
Silicon Motion Technology	1	0	7	0	2.75

Silicon Motion Technology has a consensus price target of $80.63, suggesting a potential upside of 54.72%. Given Silicon Motion Technology’s higher probable upside, analysts plainly believe Silicon Motion Technology is more favorable than Advantest.

Summary

Advantest beats Silicon Motion Technology on 11 of the 17 factors compared between the two stocks.

About Advantest

Advantest Corporation manufactures and sells semiconductors, component test system products, and mechatronics related products in Japan, the Americas, Europe, and Asia. The company operates through three segments: Semiconductor and Component Test System; Mechatronics Related Business; and Services, Support and Others. The Semiconductor and Component Test System segment provides customers with test system products for the semiconductor industry and the electronic parts industry, as well as offers test systems for SoC semiconductor devices, and test systems for memory semiconductors devices. The Mechatronics Related Business segment provides test handlers; mechatronic-applied products for handling semiconductor devices; and device interfaces, which serve as interfaces with the devices that are measured, as well as nano-technology related products. The Services, Support and Others segment provides test solutions of system level testing customer solutions for the semiconductor and modules, and support services. This segment is also involved in the sale of consumables and used products, and equipment lease and other businesses. It also engages in the research and development activities and provides maintenance and support services. The company was incorporated in 1946 and is headquartered in Tokyo, Japan.

About Silicon Motion Technology

Silicon Motion Technology Corporation, together with its subsidiaries, designs, develops, and markets NAND flash controllers for solid-state storage devices. The company offers controllers for computing-grade solid state drives (SSDs), which are used in PCs and other client devices; enterprise-grade SSDs used in data centers; eMMC and UFS mobile embedded storage for use in smartphones and IoT devices; flash memory cards and flash drives for use in expandable storage; and specialized SSDs that are used in industrial, commercial, and automotive applications. It markets its controllers under the SMI brand; enterprise-grade SSDs under the Shannon Systems brand; and single-chip industrial-grade SSDs under the FerriSSD, Ferri-eMMC, and Ferri-UFS brands. The company markets and sells its products through direct sales personnel and independent electronics distributors to NAND flash makers, module makers, hyperscalers, and OEMs. It operates in Taiwan, the United States, Korea, China, Malaysia, Singapore, and internationally. The company was founded in 1995 and is based in Hong Kong, Hong Kong.