NXP Semiconductors (NASDAQ:NXPI – Get Free Report) and Tower Semiconductor (NASDAQ:TSEM – Get Free Report) are both large-cap technology companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.
Profitability
This table compares NXP Semiconductors and Tower Semiconductor’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| NXP Semiconductors | 22.56% | 27.83% | 11.07% |
| Tower Semiconductor | 16.94% | 9.83% | 8.25% |
Analyst Ratings
This is a breakdown of current ratings and target prices for NXP Semiconductors and Tower Semiconductor, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| NXP Semiconductors | 1 | 9 | 16 | 0 | 2.58 |
| Tower Semiconductor | 0 | 2 | 7 | 1 | 2.90 |
NXP Semiconductors currently has a consensus target price of $304.91, indicating a potential upside of 32.96%. Tower Semiconductor has a consensus target price of $316.00, indicating a potential upside of 61.57%. Given Tower Semiconductor’s stronger consensus rating and higher probable upside, analysts clearly believe Tower Semiconductor is more favorable than NXP Semiconductors.
Institutional and Insider Ownership
90.5% of NXP Semiconductors shares are owned by institutional investors. Comparatively, 70.5% of Tower Semiconductor shares are owned by institutional investors. 0.1% of NXP Semiconductors shares are owned by insiders. Comparatively, 1.0% of Tower Semiconductor shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares NXP Semiconductors and Tower Semiconductor”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| NXP Semiconductors | $13.19 billion | 4.39 | $2.02 billion | $11.72 | 19.57 |
| Tower Semiconductor | $1.71 billion | 12.86 | $220.47 million | $2.53 | 77.30 |
NXP Semiconductors has higher revenue and earnings than Tower Semiconductor. NXP Semiconductors is trading at a lower price-to-earnings ratio than Tower Semiconductor, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
NXP Semiconductors has a beta of 1.8, suggesting that its stock price is 80% more volatile than the S&P 500. Comparatively, Tower Semiconductor has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.
Summary
NXP Semiconductors beats Tower Semiconductor on 9 of the 15 factors compared between the two stocks.
About NXP Semiconductors
NXP Semiconductors N.V. offers various semiconductor products. The company's product portfolio includes microcontrollers; application processors, including i.MX application processors, and i.MX 8 and 9 family of applications processors; communication processors; wireless connectivity solutions, such as near field communications, ultra-wideband, Bluetooth low-energy, Zigbee, and Wi-Fi and Wi-Fi/Bluetooth integrated SoCs; analog and interface devices; radio frequency power amplifiers; and security controllers, as well as semiconductor-based environmental and inertial sensors, including pressure, inertial, magnetic, and gyroscopic sensors. Its products are used in various applications, including automotive, industrial and Internet of Things, mobile, and communication infrastructure. The company markets its products to various original equipment manufacturers, contract manufacturers, and distributors. It operates in China, the Netherlands, the United States, Singapore, Germany, Japan, South Korea, Taiwan, and internationally. N.V. was incorporated in 2006 and is headquartered in Eindhoven, the Netherlands.
About Tower Semiconductor
Tower Semiconductor Ltd., an independent semiconductor foundry, focus on specialty process technologies to manufacture analog intensive mixed-signal semiconductor devices in Israel, the United States, Japan, Europe, and internationally. It provides various customizable process technologies, including SiGe, BiCMOS, mixed signal/CMOS, RF CMOS, CMOS image sensor, integrated power management, and MEMS. The Company also provides design enablement platform for quick and accurate design cycle, as well as transfer optimization and development process services to integrated device manufacturers and fabless companies. It serves various markets, such as consumer electronics, personal computers, communications, automotive, industrial, aerospace, military, and medical device products. The company was incorporated in 1993 and is headquartered in Migdal Haemek, Israel.
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