Critical Review: IPG Photonics (NASDAQ:IPGP) versus United Microelectronics (UMC)

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IPG Photonics (NASDAQ: IPGP) and United Microelectronics (NYSE:UMC) are both mid-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, institutional ownership, profitability and analyst recommendations.

Volatility & Risk

IPG Photonics has a beta of 1.83, indicating that its stock price is 83% more volatile than the S&P 500. Comparatively, United Microelectronics has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500.

Earnings and Valuation

This table compares IPG Photonics and United Microelectronics’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
IPG Photonics $1.41 billion 6.19 $347.61 million $7.26 22.38
United Microelectronics $5.01 billion 1.38 $326.47 million N/A N/A

IPG Photonics has higher earnings, but lower revenue than United Microelectronics.

Profitability

This table compares IPG Photonics and United Microelectronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
IPG Photonics 25.96% 21.55% 18.55%
United Microelectronics 8.16% 5.72% 3.15%

Insider and Institutional Ownership

56.6% of IPG Photonics shares are held by institutional investors. Comparatively, 5.6% of United Microelectronics shares are held by institutional investors. 33.8% of IPG Photonics shares are held by company insiders. Comparatively, 8.0% of United Microelectronics shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and target prices for IPG Photonics and United Microelectronics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
IPG Photonics 0 1 6 0 2.86
United Microelectronics 0 4 1 0 2.20

IPG Photonics presently has a consensus price target of $237.43, indicating a potential upside of 46.14%. United Microelectronics has a consensus price target of $2.60, indicating a potential downside of 7.80%. Given IPG Photonics’ stronger consensus rating and higher possible upside, research analysts clearly believe IPG Photonics is more favorable than United Microelectronics.

Dividends

United Microelectronics pays an annual dividend of $0.08 per share and has a dividend yield of 2.8%. IPG Photonics does not pay a dividend.

Summary

IPG Photonics beats United Microelectronics on 12 of the 14 factors compared between the two stocks.

About IPG Photonics

IPG Photonics Corporation develops and manufactures a range of high-performance fiber lasers, fiber amplifiers, and diode lasers used in various applications primarily in materials processing worldwide. The company's laser products include low, medium, and high power lasers; fiber pigtailed packaged diodes and fiber coupled direct diode laser systems; high-energy pulsed lasers, multi-wavelength and tunable lasers, and single-polarization and single-frequency lasers; laser diode chips and packaged laser diodes; and high power optical fiber delivery cables, fiber couplers, beam switches, chillers, scanners, and other accessories. It also provides erbium-doped fiber and Raman amplifiers, and integrated communications systems, which are deployed in broadband networks, such as fiber to the home, fiber to the curb, passive optical networks, and dense wavelength division multiplexing (DWDM) networks; ytterbium and thulium specialty fiber amplifiers and broadband light sources; and single-frequency, linearly polarized, and polarization-maintaining versions of its amplifier products. In addition, the company offers interconnect, coarse wavelength division multiplexing, DWDM, and tunable-based pluggable interfaces to serve optical transmission needs; integrated laser systems; 2D flat sheet cutter systems and multi-axis systems; welding seam stepper and picker, a fiber laser welding tool; and specialized fiber laser systems for material processing applications. Its lasers and amplifiers are also used in materials processing, advanced communications, and medical applications. The company markets its products to original equipment manufacturers, system integrators, and end users through direct sales force, as well as through agreements with independent sales representatives and distributors. IPG Photonics Corporation was founded in 1990 and is headquartered in Oxford, Massachusetts.

About United Microelectronics

United Microelectronics Corporation provides semiconductor wafer foundry solutions. The company operates through Wafer Fabrication and New Business segments. It provides circuit design, mask tooling, wafer fabrication, and assembly and testing services. The company also engages in the research, development, and manufacture of products in the solar energy and light-emitting diode industries. It serves fabless design companies, and integrated device manufacturers. The company operates primarily in Taiwan, Singapore, China, Japan, Europe, and the United States. United Microelectronics Corporation was founded in 1980 and is headquartered in Hsinchu City, Taiwan.

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