Penguin Solutions (NASDAQ:PENG – Get Free Report) and AXT (NASDAQ:AXTI – Get Free Report) are both mid-cap technology companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, earnings, profitability, dividends, valuation and analyst recommendations.
Profitability
This table compares Penguin Solutions and AXT’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Penguin Solutions | 10.43% | 36.71% | 7.95% |
| AXT | 3.23% | 0.96% | 0.70% |
Institutional & Insider Ownership
49.5% of AXT shares are held by institutional investors. 2.9% of Penguin Solutions shares are held by company insiders. Comparatively, 6.0% of AXT shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Analyst Ratings
This is a summary of current recommendations and price targets for Penguin Solutions and AXT, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Penguin Solutions | 1 | 1 | 7 | 1 | 2.80 |
| AXT | 1 | 2 | 3 | 0 | 2.33 |
Penguin Solutions currently has a consensus target price of $87.50, suggesting a potential upside of 63.83%. AXT has a consensus target price of $77.00, suggesting a potential upside of 47.85%. Given Penguin Solutions’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Penguin Solutions is more favorable than AXT.
Valuation and Earnings
This table compares Penguin Solutions and AXT”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Penguin Solutions | $1.73 billion | 1.86 | $180.62 million | $2.59 | 20.62 |
| AXT | $88.33 million | 38.66 | -$21.26 million | $0.02 | 2,604.00 |
Penguin Solutions has higher revenue and earnings than AXT. Penguin Solutions is trading at a lower price-to-earnings ratio than AXT, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Penguin Solutions has a beta of 2.86, indicating that its stock price is 186% more volatile than the S&P 500. Comparatively, AXT has a beta of 1.86, indicating that its stock price is 86% more volatile than the S&P 500.
Summary
Penguin Solutions beats AXT on 11 of the 15 factors compared between the two stocks.
About Penguin Solutions
Penguin Solutions, Inc. engages in the designing and development of enterprise solutions worldwide. It operates through three segments: Advanced Computing, Integrated Memory, and Optimized LED. It offers dynamic random access memory modules, solid-state and flash storage, and other advanced integrated memory solutions for networking and telecom, data analytics, artificial intelligence and machine learning applications; and supply chain services, including procurement, logistics, inventory management, temporary warehousing, programming, kitting, and packaging services. The company also provides Penguin Computing that focus on technical computing for core and cloud environments through high-performance computing and AI solutions; and Penguin Edge, an edge computing solution for embedded and wireless applications, such as high-performance products for government, health care, manufacturing, and telecommunications applications. In addition, it offers Stratus, which provides simplified, protected, and autonomous fault tolerant computing solutions in the data center and at the Edge through hardware and software services; and solutions to education, energy, financial services, government, hyperscale, and manufacturing markets. Further, the company provides LED chip products comprising blue and green LED chips based on gallium nitride, and related materials under Cree LED brand; and surface mount devices under the Cree LED XLamp and J Series brands. It sells its products directly to original equipment manufacturers, enterprise, government and other end customers through direct sales force, e-commerce, customer service representatives, on-site field application engineers, independent sales representatives, distributors, integrators, and resellers. The company was formerly known as SMART Global Holdings, Inc. and changed its name to Penguin Solutions, Inc. in October 2024. Penguin Solutions, Inc. was founded in 1988 and is based in Grand Cayman, Cayman Islands.
About AXT
AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. The company offers indium phosphide for use in data center connectivity using light/lasers, high-speed data transfer in data centers, 5G communications, fiber optic lasers and detectors, consumer devices, passive optical networks, silicon photonics, photonic integrated circuits, thermo-photovoltaics, RF amplifier and switching, infrared light-emitting diode (LEDS) motion control, lidar for robotics and autonomous vehicles, and infrared thermal imaging. It also provides semi-insulating gallium arsenide (GaAs) substrates for use in Wi-Fi and IoT devices, transistors, direct broadcast television, power amplifiers, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in LEDs, screen displays using micro-LEDs, printer head lasers and LEDs, 3-D sensing using VCSELs, data center communication using VCSELs, sensors for industrial robotics/near-infrared sensors, optical couplers, solar cells, night vision goggles, lidar for robotics and autonomous vehicles, and other lasers, as well as laser machining, cutting, and drilling. In addition, the company offers germanium substrates for use in multi-junction solar cells for satellites, optical sensors and detectors, terrestrial concentrated photo voltaic cells, infrared detectors, and carrier wafer for LED. Further, it provides 6N+ and 7N+ purified gallium, boron trioxide, gallium-magnesium alloy, pyrolytic boron nitride (pBN) crucibles, and pBN insulating parts. It sells its products through direct salesforce in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was incorporated in 1986 and is headquartered in Fremont, California.
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