Analyzing Microchip Technology (NASDAQ:MCHP) and Universal Display (NASDAQ:OLED)

Microchip Technology (NASDAQ:MCHP) and Universal Display (NASDAQ:OLED) are both technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.

Volatility & Risk

Microchip Technology has a beta of 1.76, suggesting that its share price is 76% more volatile than the S&P 500. Comparatively, Universal Display has a beta of 1.54, suggesting that its share price is 54% more volatile than the S&P 500.

Earnings and Valuation

This table compares Microchip Technology and Universal Display”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Microchip Technology	$4.71 billion	9.76	$230.00 million	$0.21	403.29
Universal Display	$606.91 million	6.91	$242.07 million	$4.13	22.08

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

Dividends

Microchip Technology pays an annual dividend of $1.82 per share and has a dividend yield of 2.1%. Universal Display pays an annual dividend of $2.00 per share and has a dividend yield of 2.2%. Microchip Technology pays out 866.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Universal Display pays out 48.4% of its earnings in the form of a dividend. Microchip Technology has increased its dividend for 23 consecutive years and Universal Display has increased its dividend for 8 consecutive years. Universal Display is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current recommendations for Microchip Technology and Universal Display, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Microchip Technology	0	7	13	3	2.83
Universal Display	2	3	3	0	2.12

Microchip Technology currently has a consensus target price of $98.85, suggesting a potential upside of 16.72%. Universal Display has a consensus target price of $116.33, suggesting a potential upside of 27.57%. Given Universal Display’s higher possible upside, analysts clearly believe Universal Display is more favorable than Microchip Technology.

Profitability

This table compares Microchip Technology and Universal Display’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Microchip Technology	4.88%	10.87%	4.96%
Universal Display	32.24%	11.35%	10.17%

Institutional and Insider Ownership

91.5% of Microchip Technology shares are held by institutional investors. Comparatively, 78.2% of Universal Display shares are held by institutional investors. 1.8% of Microchip Technology shares are held by insiders. Comparatively, 2.2% of Universal Display shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

About Microchip Technology

Microchip Technology Incorporated engages in the development, manufacture, and sale of smart, connected, and secure embedded control solutions in the Americas, Europe, and Asia. The company offers general purpose 8-bit, 16-bit, and 32-bit mixed-signal microcontrollers; 32-bit embedded mixed-signal microprocessors; and specialized microcontrollers for automotive, industrial, computing, communications, lighting, power supplies, motor control, human machine interface, security, wired connectivity, and wireless connectivity applications. It also provides analog, interface, mixed signal, and timing products comprising power management, linear, mixed-signal, high-voltage, thermal management, discrete diodes, and metal oxide semiconductor field effect transistors (MOSFETS), radio frequency (RF), drivers, safety, security, timing, USB, Ethernet, wireless, and other interface products; field-programmable gate array (FPGA) products; and application development tools that enable system designers to program microcontroller, FPGA, and microprocessor products for specific applications. In addition, the company offers serial electrically erasable programmable read-only memory, serial flash memories, parallel flash memories, serial static random access memories, and serial electrically erasable random access memories for the production of very small footprint devices; and licenses its SuperFlash embedded flash and non-volatile memory technologies to foundries, integrated device manufacturers, and design partners for use in the manufacture of microcontroller products, gate array, RF, analog, and neuromorphic compute products that require embedded non-volatile memory, as well as provides engineering services. Further, it offers wafer foundry and assembly, and test subcontracting manufacturing services; and timing systems products, application specific integrated circuits, and aerospace products. The company was incorporated in 1989 and is headquartered in Chandler, Arizona.

About Universal Display

Universal Display Corporation engages in the research, development, and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications in the United States and internationally. The company offers PHOLED technologies and materials for displays and lighting products under the UniversalPHOLED brand. It is also involved in the research, development, and commercialization of other OLED device and manufacturing technologies, including FOLED that are flexible OLEDs for the fabrication of OLEDs on flexible substrates; and OVJP, an organic vapor jet printing technology. In addition, the company provides technology development and support services, including third-party collaboration and support to third parties for the commercialization of their OLED products; and contract research services in the areas of chemical synthesis research, development, and commercialization for non-OLED applications, as well as engages in the intellectual property and technology licensing activities. Universal Display Corporation was founded in 1985 and is headquartered in Ewing, New Jersey.