Valens Semiconductor (NYSE:VLN) vs. SemiLEDs (NASDAQ:LEDS) Critical Analysis

SemiLEDs (NASDAQ:LEDS) and Valens Semiconductor (NYSE:VLN) are both small-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Volatility & Risk

SemiLEDs has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500. Comparatively, Valens Semiconductor has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500.

Institutional & Insider Ownership

76.3% of SemiLEDs shares are held by institutional investors. Comparatively, 33.9% of Valens Semiconductor shares are held by institutional investors. 52.1% of SemiLEDs shares are held by insiders. Comparatively, 58.9% of Valens Semiconductor shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for SemiLEDs and Valens Semiconductor, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SemiLEDs	0	0	0	0	0.00
Valens Semiconductor	0	0	1	1	3.50

Valens Semiconductor has a consensus target price of $4.00, indicating a potential upside of 94.17%. Given Valens Semiconductor’s stronger consensus rating and higher probable upside, analysts clearly believe Valens Semiconductor is more favorable than SemiLEDs.

Profitability

This table compares SemiLEDs and Valens Semiconductor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SemiLEDs	-39.28%	-91.96%	-17.03%
Valens Semiconductor	-41.94%	-14.05%	-12.51%

Valuation & Earnings

This table compares SemiLEDs and Valens Semiconductor”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SemiLEDs	$5.18 million	2.14	-$2.04 million	($0.37)	-4.16
Valens Semiconductor	$84.16 million	2.60	-$19.66 million	($0.25)	-8.24

SemiLEDs has higher earnings, but lower revenue than Valens Semiconductor. Valens Semiconductor is trading at a lower price-to-earnings ratio than SemiLEDs, indicating that it is currently the more affordable of the two stocks.

Summary

Valens Semiconductor beats SemiLEDs on 10 of the 15 factors compared between the two stocks.

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.

About Valens Semiconductor

Valens Semiconductor Ltd. engages in the provision of semiconductor products for the audio-video and automotive industries. The company offers HDBaseT technology, which enables the simultaneous delivery of ultra-high-definition digital video and audio, Ethernet, USB, control signals, and power through a single long-reach cable. It also provides audio-video solutions for the enterprise, education, industrial, digital signage, industrial, and medical markets. In addition, it offers automotive chipsets that support advanced driver-assistance systems, automotive data solutions, infotainment, telematics, and backbone connectivity. The company’s product series include VS100, VS2000, VS3000, VS6000, VS7000, Valens USB and power extender, Valens VS6320, USB 3.2 Gen1 extension chipset, VA6000, and VA7000. It has a collaboration with iCatch Technology to develop a 360-degree multi-camera videoconferencing solution. The company operates in Israel, China, Hong Kong, the United States, Japan, Germany, Hungary, and internationally. Valens Semiconductor Ltd. is headquartered in Hod Hasharon, Israel.