Pixelworks (NASDAQ:PXLW) and FormFactor (NASDAQ:FORM) Critical Comparison

Pixelworks (NASDAQ:PXLW) and FormFactor (NASDAQ:FORM) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, analyst recommendations, profitability, dividends, institutional ownership and risk.

Insider and Institutional Ownership

21.4% of Pixelworks shares are owned by institutional investors. Comparatively, 98.8% of FormFactor shares are owned by institutional investors. 4.7% of Pixelworks 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, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Pixelworks has a beta of 1.65, meaning that its share price is 65% more volatile than the S&P 500. Comparatively, FormFactor has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500.

Profitability

This table compares Pixelworks and FormFactor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pixelworks	-50.01%	-93.16%	-30.04%
FormFactor	18.29%	5.38%	4.43%

Earnings and Valuation

This table compares Pixelworks and FormFactor”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pixelworks	$59.68 million	0.81	-$26.18 million	($0.47)	-1.74
FormFactor	$663.10 million	4.96	$82.39 million	$1.74	24.41

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

Analyst Ratings

This is a summary of current ratings for Pixelworks and FormFactor, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pixelworks	0	0	3	0	3.00
FormFactor	0	4	4	0	2.50

Pixelworks presently has a consensus price target of $2.17, indicating a potential upside of 164.29%. FormFactor has a consensus price target of $55.38, indicating a potential upside of 30.36%. Given Pixelworks’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Pixelworks is more favorable than FormFactor.

Summary

FormFactor beats Pixelworks on 10 of the 14 factors compared between the two stocks.

About Pixelworks

Pixelworks, Inc., together with its subsidiaries, develops and markets semiconductor and software solutions for mobile, home and enterprise, and cinema markets in the United States, Japan, China, Taiwan, Korea, and Europe. The company offers imageprocessor integrated circuits, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing within high-end display systems; visual processor integrated circuits that works with a mobile application processor; and transcoder integrated circuits which includes software that control the operations and signal processing for converting multiple bitrates, resolutions and codecs to provide bandwidth efficient video transmissions based on industry standard protocols. It also provides software and platform licensing products comprising Pixelworks Pro Software, a software that enables development and customize the look and feel of mobile products by use of various features, such as absolute color accuracy, HDR tone mapping, SDR-to-HDR conversion, and others; and TrueCut Motion Platform, content creation tool which provides the ability to dial in a motion look on a shot-by-shot basis. The company distributes its products to integrators, branded manufacturers, and branded suppliers. Pixelworks, Inc. was founded in 1997 and is based in Portland, Oregon.

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.