Head-To-Head Comparison: United Microelectronics (NYSE:UMC) vs. Microchip Technology (NASDAQ:MCHP)

United Microelectronics (NYSE:UMC) and Microchip Technology (NASDAQ:MCHP) are both large-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Earnings & Valuation

This table compares United Microelectronics and Microchip Technology”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Microelectronics	$235.53 billion	0.08	$1.44 billion	$0.54	14.55
Microchip Technology	$4.40 billion	7.39	$1.91 billion	($0.01)	-6,039.90

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

Risk & Volatility

United Microelectronics has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500. Comparatively, Microchip Technology has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
United Microelectronics	20.35%	12.78%	8.16%
Microchip Technology	6.49%	12.62%	5.08%

Dividends

United Microelectronics pays an annual dividend of $0.35 per share and has a dividend yield of 4.5%. Microchip Technology pays an annual dividend of $1.82 per share and has a dividend yield of 3.0%. United Microelectronics pays out 64.8% of its earnings in the form of a dividend. Microchip Technology pays out -18,200.0% 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. Microchip Technology has raised its dividend for 23 consecutive years.

Institutional and Insider Ownership

5.1% of United Microelectronics shares are held by institutional investors. Comparatively, 91.5% of Microchip Technology shares are held by institutional investors. 8.0% of United Microelectronics shares are held by insiders. Comparatively, 2.1% of Microchip Technology shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for United Microelectronics and Microchip Technology, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Microelectronics	0	4	0	1	2.40
Microchip Technology	0	5	13	1	2.79

United Microelectronics presently has a consensus target price of $7.40, suggesting a potential downside of 5.79%. Microchip Technology has a consensus target price of $67.42, suggesting a potential upside of 11.63%. Given Microchip Technology’s stronger consensus rating and higher possible upside, analysts clearly believe Microchip Technology is more favorable than United Microelectronics.

Summary

Microchip Technology beats United Microelectronics on 10 of the 17 factors compared between the two stocks.

About United Microelectronics

United Microelectronics Corporation operates as a semiconductor wafer foundry in Taiwan, China, Hong Kong, Japan, Korea, the United States, Europe, and internationally. The company provides circuit design, mask tooling, wafer fabrication, and assembly and testing services. It serves fabless design companies and integrated device manufacturers. United Microelectronics Corporation was incorporated in 1980 and is headquartered in Hsinchu City, Taiwan.

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.