Reviewing MaxLinear (NYSE:MXL) and Cree (NYSE:CREE)

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MaxLinear (NYSE:MXL) and Cree (NASDAQ:CREE) are both computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, valuation, dividends, risk and earnings.

Risk & Volatility

MaxLinear has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500. Comparatively, Cree has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500.

Earnings & Valuation

This table compares MaxLinear and Cree’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MaxLinear $385.00 million 4.55 -$26.19 million $0.78 31.78
Cree $1.49 billion 4.21 -$279.96 million ($0.15) -398.40

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

Analyst Recommendations

This is a summary of recent ratings and price targets for MaxLinear and Cree, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MaxLinear 0 6 0 0 2.00
Cree 1 7 4 0 2.25

MaxLinear currently has a consensus price target of $20.80, indicating a potential downside of 16.10%. Cree has a consensus price target of $58.67, indicating a potential downside of 1.82%. Given Cree’s stronger consensus rating and higher probable upside, analysts clearly believe Cree is more favorable than MaxLinear.

Profitability

This table compares MaxLinear and Cree’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MaxLinear -9.17% 8.68% 4.59%
Cree -18.25% 1.59% 1.18%

Insider & Institutional Ownership

91.7% of MaxLinear shares are owned by institutional investors. 10.0% of MaxLinear shares are owned by company insiders. Comparatively, 0.6% of Cree shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

MaxLinear beats Cree on 10 of the 14 factors compared between the two stocks.

About MaxLinear

MaxLinear, Inc. provides radio-frequency (RF), high-performance analog, and mixed-signal communications systems-on-chip solutions (SoCs) for the connected home, wired and wireless infrastructure, and industrial and multi-market applications worldwide. The company offers range of semiconductor products, such as RF receivers and RF receiver SoCs, wireless infrastructure backhaul RF receivers and modem SoCs, laser modulator drivers, transimpedance amplifiers, clock and data recovery circuits, interface solutions, power management products, and data encryption and compression products. It also provides range of electronic devices, including cable DOCSIS broadband modems and gateways; wireline connectivity devices for in-home networking applications; RF transceivers and modems; fiber-optic modules; video set-top boxes and gateways; hybrid analog and digital televisions, and direct broadcast satellite outdoor and indoor units; and power management and interface products. It sells its products to electronics distributors, module makers, original equipment manufacturers, and original design manufacturers through direct sales force, third party sales representatives, and a network of distributors. MaxLinear, Inc. was founded in 2003 and is headquartered in Carlsbad, California.

About Cree

Cree, Inc. provides lighting-class light emitting diode (LED), lighting, and semiconductor products for power and radio-frequency (RF) applications in the United States, China, Europe, South Korea, Japan, Malaysia, Taiwan, and internationally. It operates in three segments: Wolfspeed, LED Products, and Lighting Products. The Wolfspeed segment offers silicon carbide (SiC) materials for RF, power switching, gemstones, and other applications. It also provides SiC power device products, including SiC Schottky diodes, metal oxide semiconductor field effect transistors (MOSFETs), power modules, and gate driver boards for electric vehicles, including charging infrastructure, server power supplies, solar inverters, uninterruptible power supplies, industrial power supplies, and other applications. In addition, this segment offers gallium nitride (GaN) die, high-electron mobility transistors (HEMTs), monolithic microwave integrated circuits (MMICs), and laterally diffused MOSFET (LDMOS) power transistors for telecommunications infrastructure, military, and other commercial applications; and custom die manufacturing services for GaN HEMTs and MMICs. The LED Products segment provides blue and green LED chip products for video screens, gaming displays, function indicator lights and automotive backlights, headlamps, and directional indicators. It also offers XLamp LED components and LED modules for lighting applications; and surface mount and through-hole packaged LED products for video, signage, general illumination, transportation, gaming, and specialty lighting applications. The Lighting Products segment offers LED lighting systems and lamps for to distributors, retailers, and customers for offices, retail spaces, restaurants, hospitality, schools, universities, manufacturing, healthcare, airports, municipal, residential, street lighting, parking structures, and other applications. The company was founded in 1987 and is headquartered in Durham, North Carolina.

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