Analyzing Power Integrations (NASDAQ:POWI) & ASE Technology (NYSE:ASX)

ASE Technology (NYSE:ASX) and Power Integrations (NASDAQ:POWI) are both technology companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Volatility and Risk

ASE Technology has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500. Comparatively, Power Integrations has a beta of 1.54, meaning that its share price is 54% more volatile than the S&P 500.

Institutional and Insider Ownership

6.8% of ASE Technology shares are held by institutional investors. 22.9% of ASE Technology shares are held by insiders. Comparatively, 1.2% of Power Integrations shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

ASE Technology pays an annual dividend of $0.30 per share and has a dividend yield of 0.7%. Power Integrations pays an annual dividend of $0.86 per share and has a dividend yield of 1.9%. ASE Technology pays out 34.9% of its earnings in the form of a dividend. Power Integrations pays out 191.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Power Integrations has raised its dividend for 12 consecutive years. Power Integrations is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares ASE Technology and Power Integrations’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ASE Technology	8.52%	16.12%	6.47%
Power Integrations	5.58%	5.50%	4.79%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for ASE Technology and Power Integrations, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ASE Technology	0	0	2	1	3.33
Power Integrations	0	4	4	0	2.50

Power Integrations has a consensus price target of $71.33, suggesting a potential upside of 59.30%. Given Power Integrations’ higher probable upside, analysts plainly believe Power Integrations is more favorable than ASE Technology.

Valuation & Earnings

This table compares ASE Technology and Power Integrations”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ASE Technology	$20.73 billion	4.79	$1.28 billion	$0.86	51.62
Power Integrations	$443.50 million	5.64	$22.09 million	$0.45	99.51

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

Summary

ASE Technology beats Power Integrations on 12 of the 18 factors compared between the two stocks.

About ASE Technology

ASE Technology Holding Co., Ltd., together with its subsidiaries, provides semiconductors packaging and testing, and electronic manufacturing services in the United States, Taiwan, Asia, Europe, and internationally. It develops, constructs, sells, leases, and manages real estate properties; produces substrates; offers information software, equipment leasing, investment advisory, and warehousing management services; commercial complex, after-sales, and support services; manages parking lot services; processes and sells computer and communication peripherals, electronic components, telecommunications equipment, and motherboards; and imports and exports goods and technology. ASE Technology Holding Co., Ltd. was founded in 1984 and is based in Kaohsiung, Taiwan.

About Power Integrations

Power Integrations, Inc. designs, develops, manufactures, and markets analog and mixed-signal integrated circuits (ICs), and other electronic components and circuitry used in high-voltage power conversion worldwide. The company provides a range of alternating current to direct current power conversion products that address power supply ranging from less than one watt of output to approximately 500 watts of output for mobile-device chargers, consumer appliances, utility meters, LCD monitors, main and standby power supplies for desktop computers and TVs, LED lighting, and various other consumer and industrial applications, as well as power conversion in high-power applications comprising industrial motors, solar and wind-power systems, electric vehicles, and high-voltage DC transmission systems. It also offers high-voltage diodes; InnoSwitch IC for electric vehicles; high-voltage gate-driver products used to operate high-voltage switches, such as insulated-gate bipolar transistors and silicon-carbide MOSFETs under the SCALE and SCALE-2 product-family names; and SCALE-iDriver for use in powertrain and charging applications for electric vehicles. In addition, the company provides motor-driver ICs for use in refrigerator compressors, ceiling fans, and air purifiers, as well as pumps, fans, and blowers used in consumer appliances, such as dishwashers and laundry machines. It serves communications, computer, consumer, and industrial markets. The company sells its products to original equipment manufacturers and merchant power supply manufacturers through direct sales staff, as well as a network of independent sales representatives and distributors. Power Integrations, Inc. was incorporated in 1988 and is headquartered in San Jose, California.