Critical Contrast: Micron Technology (MU) versus Cavium (CAVM)

Micron Technology (NASDAQ: MU) and Cavium (NASDAQ:CAVM) are both mid-cap computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, dividends, profitability, valuation, institutional ownership and earnings.

Profitability

This table compares Micron Technology and Cavium’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Micron Technology 25.04% 32.09% 16.15%
Cavium -22.82% 5.94% 2.78%

Valuation & Earnings

This table compares Micron Technology and Cavium’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Micron Technology $20.32 billion 2.26 $9.73 billion $4.32 9.35
Cavium $865.94 million 5.52 $79.41 million ($2.96) -23.47

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

Risk and Volatility

Micron Technology has a beta of 1.82, meaning that its share price is 82% more volatile than the S&P 500. Comparatively, Cavium has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Insider & Institutional Ownership

79.3% of Micron Technology shares are owned by institutional investors. Comparatively, 98.2% of Cavium shares are owned by institutional investors. 0.7% of Micron Technology shares are owned by insiders. Comparatively, 4.7% of Cavium shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for Micron Technology and Cavium, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Micron Technology 1 3 28 0 2.84
Cavium 0 4 13 0 2.76

Micron Technology currently has a consensus target price of $45.83, suggesting a potential upside of 13.46%. Cavium has a consensus target price of $78.13, suggesting a potential upside of 12.49%. Given Micron Technology’s stronger consensus rating and higher probable upside, analysts clearly believe Micron Technology is more favorable than Cavium.

Summary

Micron Technology beats Cavium on 10 of the 14 factors compared between the two stocks.

Micron Technology Company Profile

Micron Technology, Inc. is engaged in semiconductor systems. The Company’s portfolio of memory technologies, including dynamic random-access memory (DRAM), negative-AND (NAND) Flash and NOR Flash are the basis for solid-state drives, modules, multi-chip packages and other system solutions. Its business segments include Compute and Networking Business Unit (CNBU), which includes memory products sold into compute, networking, graphics and cloud server markets; Mobile Business Unit (MBU), which includes memory products sold into smartphone, tablet and other mobile-device markets; Storage Business Unit (SBU), which includes memory products sold into enterprise, client, cloud and removable storage markets, and SBU also includes products sold to Intel through its Intel/Micron Flash Technology (IMFT) joint venture, and Embedded Business Unit (EBU), which includes memory products sold into automotive, industrial, connected home and consumer electronics markets.

Cavium Company Profile

Cavium, Inc. is a provider of integrated semiconductor processors that enable intelligent processing for wired and wireless infrastructure and cloud for networking, communications, storage and security applications. The Company’s products consist of multi-core processors for embedded and data center applications, network connectivity for server and switches, storage connectivity, and security processors for offload and appliance. A range of its products also include a suite of embedded security protocols that enable unified threat management (UTM), secure connectivity, network perimeter protection and deep packet inspection (DPI). The Company sells its products to networking original equipment manufacturers (OEM), which sell into the enterprise, datacenter, service provider, and broadband and consumer markets. In the enterprise market, its products are used in routers, switches, storage appliances, server connectivity for networking and storage, wireless local area networks and UTM.

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