Critical Comparison: Alpha and Omega Semiconductor (NASDAQ:AOSL) & FormFactor (NASDAQ:FORM)

Alpha and Omega Semiconductor (NASDAQ:AOSL) and FormFactor (NASDAQ:FORM) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, dividends, risk, valuation, earnings and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations and price targets for Alpha and Omega Semiconductor and FormFactor, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alpha and Omega Semiconductor	1	0	2	0	2.33
FormFactor	0	4	4	0	2.50

Alpha and Omega Semiconductor currently has a consensus price target of $42.67, indicating a potential upside of 17.83%. FormFactor has a consensus price target of $59.63, indicating a potential upside of 36.38%. Given FormFactor’s stronger consensus rating and higher probable upside, analysts clearly believe FormFactor is more favorable than Alpha and Omega Semiconductor.

Volatility and Risk

Alpha and Omega Semiconductor has a beta of 2.39, suggesting that its share price is 139% more volatile than the S&P 500. Comparatively, FormFactor has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500.

Insider and Institutional Ownership

79.0% of Alpha and Omega Semiconductor shares are owned by institutional investors. Comparatively, 98.8% of FormFactor shares are owned by institutional investors. 17.9% of Alpha and Omega Semiconductor shares are owned by company insiders. Comparatively, 1.0% of FormFactor shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Alpha and Omega Semiconductor and FormFactor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alpha and Omega Semiconductor	-1.44%	1.39%	1.05%
FormFactor	17.20%	4.18%	3.43%

Earnings & Valuation

This table compares Alpha and Omega Semiconductor and FormFactor’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alpha and Omega Semiconductor	$657.27 million	1.58	$12.36 million	($0.34)	-106.50
FormFactor	$705.94 million	4.78	$82.39 million	$1.32	33.12

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

Summary

FormFactor beats Alpha and Omega Semiconductor on 12 of the 14 factors compared between the two stocks.

About Alpha and Omega Semiconductor

Alpha and Omega Semiconductor Limited designs, develops, and supplies power semiconductor products for computing, consumer electronics, communication, and industrial applications in Hong Kong, China, South Korea, the United States, and internationally. It offers power discrete products, including metal-oxide-semiconductor field-effect transistors (MOSFET), SRFETs, XSFET, electrostatic discharge, protected MOSFETs, high and mid-voltage MOSFETs, and insulated gate bipolar transistors for use in smart phone chargers, battery packs, notebooks, desktop and servers, data centers, base stations, graphics card, game boxes, TVs, AC adapters, power supplies, motor control, power tools, E-vehicles, white goods and industrial motor drives, UPS systems, solar inverters, and industrial welding. The company also provides power ICs that deliver power, as well as control and regulate the power management variables, such as the flow of current and level of voltage. Its power ICs are used in flat panel displays, TVs, notebooks, graphic cards, servers, DVD/Blu-Ray players, set-top boxes, and networking equipment. In addition, the company offers 650V SiC MOSFET, a switching solutions for solar inverters, motor drives, industrial power supplies, and energy storage systems. Further, it provides 750V SiC MOSFET for electric vehicle systems such as the on-board charge; transient voltage suppressors; silicon carbide product for industrial applications, such as solar inverters, UPS, and battery management systems. Alpha and Omega Semiconductor Limited was incorporated in 2000 and is headquartered in Sunnyvale, California.

About FormFactor

FormFactor, Inc. designs, manufactures, and sells probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems to semiconductor companies and scientific institutions in the United States, Taiwan, South Korea, China, Europe, Japan, Malaysia, Singapore, and internationally. It operates in two segments, Probe Cards and Systems. The company offers probe cards to test various semiconductor device types, including systems on a chip products, mobile application processors, microprocessors, microcontrollers, and graphic processors, as well as radio frequency, analog, mixed signal, image sensor, electro-optical, dynamic random access memory, NAND flash memory, and NOR flash memory devices, as well as computer processor devices; and analytical probes, which are used for a range of applications, including device characterization, electrical simulation model development, failure analysis, and prototype design debugging for universities, research institutions, semiconductor integrated device manufacturers, semiconductor foundries, and fabless semiconductor companies. It also provides probe systems for semiconductor design engineers to capture and analyze accurate data; surface metrology systems for the development, production, and quality control of semiconductor products; thermal subsystems, such as thermal chucks and other test systems used in probe stations and other applications; and precision cryogenic instruments, semiconductor tests, and measurement systems. In addition, the company offers on-site probe card maintenance and service training, seminars, and telephone support services. It markets and sells its products through direct sales force, manufacturers' representatives, and distributors. The company was incorporated in 1993 and is headquartered in Livermore, California.