Financial Survey: Cree (NASDAQ:CREE) and Diodes (DIOD)

Cree (NASDAQ: CREE) and Diodes (NASDAQ:DIOD) are both technology companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, profitability, valuation and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
Cree -8.42% -0.44% -0.37%
Diodes 2.96% 6.44% 3.57%

Risk & Volatility

Cree has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500. Comparatively, Diodes has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Cree and Diodes, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cree 5 7 3 0 1.87
Diodes 1 2 2 0 2.20

Cree currently has a consensus price target of $28.81, suggesting a potential downside of 21.80%. Diodes has a consensus price target of $36.50, suggesting a potential upside of 21.99%. Given Diodes’ stronger consensus rating and higher probable upside, analysts plainly believe Diodes is more favorable than Cree.

Institutional and Insider Ownership

99.0% of Cree shares are owned by institutional investors. Comparatively, 74.7% of Diodes shares are owned by institutional investors. 1.1% of Cree shares are owned by company insiders. Comparatively, 7.0% of Diodes shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cree $1.47 billion 2.45 -$98.11 million ($1.22) -30.20
Diodes $942.16 million 1.57 $15.93 million $0.60 49.87

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

Summary

Diodes beats Cree on 9 of the 14 factors compared between the two stocks.

Cree Company Profile

Cree, Inc. is a manufacturer of lighting-class light emitting diode (LED) products, lighting products and semiconductor products for power and radio-frequency (RF) applications. The Company’s products are focused for applications, such as indoor and outdoor lighting, video displays, transportation, electronic signs and signals, power supplies, inverters and wireless systems. The Company has three segments: Lighting Products, LED Products, and Power and RF Products. The Company’s Lighting Products segment offers LED lighting systems and bulbs. The Company’s LED Products segment offers LED components, LED chips and silicon carbide (SiC) materials. The Company’s Power and RF Products segment offers power devices and RF devices. The Company designs, manufactures and markets lighting systems for indoor and outdoor applications, with a focus on LED lighting systems for the commercial, industrial and consumer markets.

Diodes Company Profile

Diodes Incorporated is a manufacturer and supplier of application-specific standard products within the discrete, logic, analog and mixed-signal semiconductor markets, serving the consumer electronics, computing, communications, industrial and automotive markets. The Company’s products include diodes; rectifiers; transistors; metal-oxide semiconductor field-effect transistors (MOSFETs); protection devices; amplifiers and comparators; Hall-effect and temperature sensors, and power management devices, including light emitting diode (LED) drivers, alternating current (AC)-direct current (DC) and DC-DC switching, linear voltage regulators and voltage references, along with special function devices, such as universal serial bus (USB) power switches, load switches, voltage supervisors and motor controllers. It also holds interests in Pericom Semiconductor Corporation, which designs, develops and markets integrated circuits (ICs) and frequency control products (FCPs).

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