Critical Survey: Sequans Communications (NYSE:SQNS) & STMicroelectronics (NYSE:STM)

Sequans Communications (NYSE:SQNS) and STMicroelectronics (NYSE:STM) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Volatility and Risk

Sequans Communications has a beta of 2.79, indicating that its stock price is 179% more volatile than the S&P 500. Comparatively, STMicroelectronics has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500.

Earnings and Valuation

This table compares Sequans Communications and STMicroelectronics’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sequans Communications $40.25 million 1.85 -$36.22 million ($0.36) -2.59
STMicroelectronics $9.66 billion 1.68 $1.29 billion $1.43 12.64

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

Dividends

STMicroelectronics pays an annual dividend of $0.20 per share and has a dividend yield of 1.1%. Sequans Communications does not pay a dividend. STMicroelectronics pays out 14.0% of its earnings in the form of a dividend.

Institutional and Insider Ownership

36.2% of Sequans Communications shares are owned by institutional investors. Comparatively, 3.4% of STMicroelectronics shares are owned by institutional investors. 9.4% of Sequans Communications shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Sequans Communications and STMicroelectronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sequans Communications -103.20% -5,061.35% -54.53%
STMicroelectronics 12.89% 19.85% 11.50%

Analyst Recommendations

This is a summary of current ratings and price targets for Sequans Communications and STMicroelectronics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sequans Communications 0 0 5 0 3.00
STMicroelectronics 1 3 8 0 2.58

Sequans Communications currently has a consensus price target of $2.23, indicating a potential upside of 138.99%. STMicroelectronics has a consensus price target of $17.35, indicating a potential downside of 4.02%. Given Sequans Communications’ stronger consensus rating and higher probable upside, research analysts clearly believe Sequans Communications is more favorable than STMicroelectronics.

Summary

STMicroelectronics beats Sequans Communications on 9 of the 16 factors compared between the two stocks.

About Sequans Communications

Sequans Communications S.A., together with its subsidiaries, engages in fabless designing, developing, and supplying 4G LTE semiconductor solutions for wireless broadband and Internet of Things applications. Its solutions incorporate baseband processor and radio frequency (RF) transceiver integrated circuits along with proprietary signal processing techniques, algorithms, and software stacks. The company offers baseband solutions used to encode and decode data based on 4G protocols that serve as the wireless processing platform for a 4G device; RF transceivers used to transmit and receive wireless transmissions; and system-on-chip solutions that integrate the baseband and RF transceiver functions. Its solutions serves as the wireless communications platform in various devices, including USB dongles; portable routers; embedded wireless modems for computing and multimedia devices; and customer-premises equipment, such as fixed wireless broadband access modems, routers, and residential gateways. The company's solutions also provide connectivity for industrial devices in transportation, security, asset tracking, retail, smart energy, smart city, agriculture, healthcare, and other applications. It serves OEMs, ODMs, contract manufacturers, or system integrators, as well as distributors who provide customer communications, logistics, and support functions. The company operates in the Asia-Pacific region, including Taiwan, China, South Korea, and Japan; Europe; the Middle East; and North and South America. Sequans Communications S.A. was founded in 2003 and is headquartered in Paris, France.

About STMicroelectronics

STMicroelectronics N.V., together with its subsidiaries, develops, manufactures, and markets semiconductor products worldwide. It operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The company offers a range of products, including discrete and standard commodity components, application-specific integrated circuits, full-custom and semi-custom devices, and application-specific standard products for analog, digital, and mixed-signal applications, as well as silicon chips and smartcards. It also provides subsystems, and assembly and other services. The company sells its products through its distributors and retailers, as well as through sales representatives. STMicroelectronics N.V. was founded in 1987 and is headquartered in Geneva, Switzerland.

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