Reviewing Broadcom (NASDAQ:AVGO) and Teradyne (NASDAQ:TER)

Teradyne (NASDAQ:TER) and Broadcom (NASDAQ:AVGO) are both large-cap technology companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Earnings and Valuation

This table compares Teradyne and Broadcom”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Teradyne	$3.19 billion	10.68	$554.05 million	$8.71	25.05
Broadcom	$63.89 billion	21.94	$23.13 billion	$7.83	37.51

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

Dividends

Teradyne pays an annual dividend of $0.52 per share and has a dividend yield of 0.2%. Broadcom pays an annual dividend of $2.60 per share and has a dividend yield of 0.9%. Teradyne pays out 6.0% of its earnings in the form of a dividend. Broadcom pays out 33.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Teradyne has increased its dividend for 1 consecutive years and Broadcom has increased its dividend for 15 consecutive years. Broadcom is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

99.8% of Teradyne shares are held by institutional investors. Comparatively, 76.4% of Broadcom shares are held by institutional investors. 0.2% of Teradyne shares are held by company insiders. Comparatively, 1.9% of Broadcom shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Teradyne and Broadcom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Teradyne	27.46%	43.81%	30.22%
Broadcom	42.94%	48.33%	23.78%

Risk & Volatility

Teradyne has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500. Comparatively, Broadcom has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Teradyne and Broadcom, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Teradyne	0	4	11	1	2.81
Broadcom	0	5	39	1	2.91

Teradyne currently has a consensus target price of $405.86, suggesting a potential upside of 85.99%. Broadcom has a consensus target price of $530.52, suggesting a potential upside of 80.64%. Given Teradyne’s higher possible upside, equities analysts plainly believe Teradyne is more favorable than Broadcom.

Summary

Broadcom beats Teradyne on 11 of the 17 factors compared between the two stocks.

About Teradyne

Teradyne, Inc. designs, develops, manufactures, and sells automated test systems and robotics products worldwide. It operates through four segments; Semiconductor Test, System Test, Robotics, and Wireless Test. The Semiconductor Test segment offers products and services for wafer level and device package testing of semiconductor devices in automotive, industrial, communications, consumer, smartphones, cloud, computer and electronic game, and other applications. This segment also provides FLEX test platform systems; J750 test system to address the volume semiconductor devices, including microcontrollers; Magnum platform that tests memory devices, such as flash memory and DRAM; and ETS platform for semiconductor manufacturers, and assembly and test subcontractors in the analog/mixed signal markets. It serves integrated device manufacturers that integrate the fabrication of silicon wafers into their business; fabless companies that outsource the manufacturing of silicon wafers; foundries; and semiconductor assembly and test providers. The System Test segment offers defense/aerospace test instrumentation and systems; storage and system level test systems; and circuit-board test and inspection systems. The Wireless Test segment provides wireless test solutions for silicon validation, wireless module manufacturing, and wireless end device manufacturing under the LitePoint brand. This segment also offers IQxel-MX and IQxel-MW7G series products for edge measurement performance in the manufacturing of connectivity products; IQxstream-5G and IQgig-5G family products to support 4G and 5G technologies; and IQgig-UWB+ for certification and manufacturing test support for ultra wideband products. The Robotics segment provides collaborative robotic arms, autonomous mobile robots, and advanced robotic control software for manufacturing, logistics, and industrial customers. The company was incorporated in 1960 and is headquartered in North Reading, Massachusetts.

About Broadcom

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices. The company also offers RF front end modules and filter; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; inductive charging; attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.