Nova (NASDAQ:NVMI) versus SemiLEDS (NASDAQ:LEDS) Critical Review

Nova (NASDAQ:NVMI) and SemiLEDS (NASDAQ:LEDS) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Risk and Volatility

Nova has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500. Comparatively, SemiLEDS has a beta of 1.58, suggesting that its stock price is 58% more volatile than the S&P 500.

Insider and Institutional Ownership

83.0% of Nova shares are owned by institutional investors. Comparatively, 76.3% of SemiLEDS shares are owned by institutional investors. 1.0% of Nova shares are owned by insiders. Comparatively, 57.4% of SemiLEDS shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Nova and SemiLEDS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nova	29.21%	21.77%	12.56%
SemiLEDS	-6.71%	-89.53%	-13.38%

Valuation and Earnings

This table compares Nova and SemiLEDS”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nova	$880.58 million	21.86	$259.22 million	$8.02	75.52
SemiLEDS	$43.01 million	0.37	-$1.13 million	($0.28)	-6.89

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

Analyst Recommendations

This is a breakdown of current ratings and target prices for Nova and SemiLEDS, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nova	0	2	9	0	2.82
SemiLEDS	1	0	0	0	1.00

Nova currently has a consensus target price of $518.22, indicating a potential downside of 14.44%. Given Nova’s stronger consensus rating and higher possible upside, research analysts plainly believe Nova is more favorable than SemiLEDS.

Summary

Nova beats SemiLEDS on 13 of the 14 factors compared between the two stocks.

About Nova

Nova Ltd. designs, develops, produces, and sells process control systems used in the manufacture of semiconductors in Israel, Taiwan, the United States, China, Korea, and internationally. Its product portfolio includes a set of metrology platforms for dimensional, films, and materials and chemical metrology measurements for process control for various semiconductor manufacturing process steps, including lithography, etch, chemical mechanical planarization, deposition, electrochemical plating, and advanced packaging. The company serves various sectors of the integrated circuit manufacturing industry, including logic, foundries, and memory manufacturers, as well as process equipment manufacturers. Nova Ltd. was formerly known as Nova Measuring Instruments Ltd. and changed its name to Nova Ltd. in July 2021. Nova Ltd. was incorporated in 1993 and is headquartered in Rehovot, Israel.

About SemiLEDS

SemiLEDs Corporation develops, manufactures, and sells light emitting diode (LED) chips, LED components, and LED modules and systems in the United States, Taiwan, the Netherlands, Germany, Japan, and internationally. The company also sells enhanced vertical, LED product series in blue, white, green, and UV; LED chips to packagers or distributors; and lighting products primarily to original design manufacturers of lighting products and the end-users of lighting devices, as well as packs and sells its LED chips. Its products are used for general lighting applications, including commercial, industrial, and residential lighting; and specialty industrial applications, such as ultraviolet or UV, curing of polymers, LED light therapy in medical/cosmetic applications, counterfeit detection, germicidal and viricidal devices LED lighting for horticulture applications, architectural lighting, and entertainment lighting. The company was incorporated in 2005 and is based in Chu-Nan, Taiwan.