Head-To-Head Review: CEVA (CEVA) & AXT (AXTI)

CEVA (NASDAQ: CEVA) and AXT (NASDAQ:AXTI) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, profitability, institutional ownership, dividends, valuation and risk.

Volatility & Risk

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CEVA has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500. Comparatively, AXT has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for CEVA and AXT, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CEVA 0 1 5 0 2.83
AXT 0 1 3 0 2.75

CEVA presently has a consensus price target of $47.50, suggesting a potential upside of 26.33%. AXT has a consensus price target of $10.42, suggesting a potential upside of 37.06%. Given AXT’s higher possible upside, analysts plainly believe AXT is more favorable than CEVA.

Valuation and Earnings

This table compares CEVA and AXT’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CEVA $87.51 million 9.55 $17.02 million $0.76 49.47
AXT $98.67 million 3.04 $10.14 million $0.26 29.23

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

Profitability

This table compares CEVA and AXT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CEVA 19.46% 7.82% 6.94%
AXT 10.28% 5.81% 5.14%

Insider & Institutional Ownership

90.3% of CEVA shares are owned by institutional investors. Comparatively, 56.1% of AXT shares are owned by institutional investors. 3.9% of CEVA shares are owned by insiders. Comparatively, 6.9% of AXT shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

CEVA beats AXT on 10 of the 14 factors compared between the two stocks.

CEVA Company Profile

CEVA, Inc. (CEVA) is a licensor of signal processing intellectual property (IP). The Company partners with semiconductor companies and original equipment manufacturers (OEMs) to create connected devices for a range of end markets, including mobile, consumer, automotive, industrial and Internet of things (IoT). The Company operates in the segment of licensing of intellectual property to semiconductor companies and electronic equipment manufacturers. CEVA addresses the requirements of the mobile, consumer, automotive, industrial and IoT markets by designing and licensing a range of application-specific signal processing platforms, which enable the design of solutions for developing a range of applications, including communications and connectivity, audio and voice, imaging and vision, and storage.

AXT Company Profile

AXT, Inc. (AXT) is a developer and producer of compound and single element semiconductor substrates, also known as wafers. The dominant substrates used in producing semiconductor chips and other electronic circuits are made from silicon. The Company is engaged in the design, development, manufacture and distribution of compound semiconductor substrates and sale of materials. The Company provides alternative or specialty materials in the form of substrates or wafers, including compound and single element substrates. Its compound substrates combine indium with phosphorous (InP) or gallium with arsenic (GaAs). Its single element substrates are made from germanium (Ge). The Company uses its Vertical Gradient Freeze (VGF) technique for growing single crystal Indium Phosphide (InP), Gallium Arsenide (GaAs) and Germanium (Ge) ingots used to produce wafers for diverse electronic and optoelectronic device and circuit applications.

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