Reviewing Alpha and Omega Semiconductor Limited (AOSL) and SemiLEDS Corporation (NASDAQ:LEDS)

SemiLEDS Corporation (NASDAQ: LEDS) and Alpha and Omega Semiconductor Limited (NASDAQ:AOSL) are both small-cap integrated circuits companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, profitability, dividends, analyst recommendations, earnings, institutional ownership and valuation.

Insider & Institutional Ownership

2.1% of SemiLEDS Corporation shares are held by institutional investors. Comparatively, 69.5% of Alpha and Omega Semiconductor Limited shares are held by institutional investors. 40.1% of SemiLEDS Corporation shares are held by insiders. Comparatively, 21.7% of Alpha and Omega Semiconductor Limited shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares SemiLEDS Corporation and Alpha and Omega Semiconductor Limited’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
SemiLEDS Corporation $10.14 million 0.86 -$21.27 million ($5.04) -0.49
Alpha and Omega Semiconductor Limited $383.34 million 1.11 $13.82 million $0.61 29.03

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

Profitability

This table compares SemiLEDS Corporation and Alpha and Omega Semiconductor Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SemiLEDS Corporation -182.84% -59.70% -30.13%
Alpha and Omega Semiconductor Limited 3.92% 4.85% 3.78%

Analyst Ratings

This is a summary of current ratings and target prices for SemiLEDS Corporation and Alpha and Omega Semiconductor Limited, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SemiLEDS Corporation 0 0 0 0 N/A
Alpha and Omega Semiconductor Limited 0 1 3 0 2.75

Alpha and Omega Semiconductor Limited has a consensus price target of $25.00, indicating a potential upside of 41.16%. Given Alpha and Omega Semiconductor Limited’s higher probable upside, analysts plainly believe Alpha and Omega Semiconductor Limited is more favorable than SemiLEDS Corporation.

Risk and Volatility

SemiLEDS Corporation has a beta of 2.26, suggesting that its stock price is 126% more volatile than the S&P 500. Comparatively, Alpha and Omega Semiconductor Limited has a beta of 0.29, suggesting that its stock price is 71% less volatile than the S&P 500.

Summary

Alpha and Omega Semiconductor Limited beats SemiLEDS Corporation on 10 of the 12 factors compared between the two stocks.

About SemiLEDS Corporation

SemiLEDs Corporation develops, manufactures and sells light emitting diode (LED) chips and LED components. The Company’s products are used primarily for general lighting applications, including street lights and commercial, industrial and residential lighting. Its LED chips may also be used in specialty industrial applications, such as ultraviolet (UV), curing of polymers, LED light therapy in medical/cosmetic applications, counterfeit detection, LED lighting for horticulture applications, architectural lighting and entertainment lighting. The Company produces a range of blue, white, green and UV LED chips, including its Enhanced Vertical (EV) LED product series, ranging from chip sizes of approximately 380 microns (um) by 380um to 1,520um by 1,520um. It designs, assembles and sells lighting fixtures and systems for general lighting applications, including commercial, residential and industrial lighting. Its lighting products consist primarily of LED luminaries and LED retrofits.

About Alpha and Omega Semiconductor Limited

Alpha and Omega Semiconductor Limited is a designer, developer and global supplier of power semiconductors. The Company’s portfolio of power semiconductors includes approximately 1,600 products, as of June 30, 2016. The Company’s product portfolio consists of two categories: power discretes and power integrated circuits (ICs). The Company’s portfolio of products focuses high-volume applications, including personal computers, flat panel televisions, light-emitting diode (LED) lighting, smart phones, battery packs, consumer and industrial motor controls and power supplies for television, computers, servers and telecommunications equipment. The Company sells its products primarily to distributors in the Asia Pacific region, who in turn sell these products to end customers. The Company conducts its operations primarily in the United States, Hong Kong, China, Taiwan, Korea and Japan. Its products are applicable in desktop and tablet personal computers, flat panel displays and televisions.

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