Head-To-Head Comparison: Broadcom (NASDAQ:AVGO) vs. United Microelectronics (NYSE:UMC)

Broadcom (NASDAQ:AVGO) and United Microelectronics (NYSE:UMC) are two notable large-cap companies in the technology sector. Both firms play significant roles in the semiconductor industry, but when it comes to investing, which stock is the better choice? This analysis will explore various factors such as institutional ownership, risk assessments, dividend policies, earnings potential, valuations, profitability indicators, and recommendations from analysts.

Analyst Recommendations

Recent evaluations and target prices for Broadcom and United Microelectronics have been collected from analytical sources like MarketBeat. Below is a summary of their current recommendations:

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Broadcom	0	2	24	0	2.92
United Microelectronics	1	3	0	0	1.75

Broadcom has a consensus target price of $225.04, suggesting an upside potential of 8.43%. Conversely, United Microelectronics has a target price of $7.40, indicating a higher upside of 28.52%. This suggests that analysts may view United Microelectronics as a more attractive investment option at this time.

Insider and Institutional Ownership

Broadcom enjoys strong institutional support, with 76.4% of its shares owned by institutional investors. In stark contrast, only 5.1% of United Microelectronics shares are held by such investors. Additionally, 2.0% of Broadcom shares are owned by insiders, while United Microelectronics has a higher insider ownership of 8.0%. This disparity in ownership indicates that investors in Broadcom, particularly large funds and institutions, expect the company to experience sustained growth.

Valuation and Earnings

The following table illustrates the revenue, earnings per share (EPS), and valuation metrics for both companies:

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Broadcom	$51.57 billion	18.86	$5.90 billion	$1.23	169.29
United Microelectronics	$7.09 billion	2.04	$1.95 billion	$0.58	9.93

Broadcom outperforms United Microelectronics in terms of revenue and earnings. However, United Microelectronics is currently trading at a significantly lower price-to-earnings ratio, suggesting it could be viewed as the more economic option.

Profitability

Comparing the profitability of both companies, the following table highlights their net margins, return on equity, and return on assets:

	Net Margins	Return on Equity	Return on Assets
Broadcom	11.43%	28.00%	11.16%
United Microelectronics	20.35%	12.78%	8.16%

While Broadcom has solid profitability metrics, United Microelectronics shows stronger net margins, indicating it is more efficient at converting revenue into actual profit.

Dividends

Dividends are a critical consideration for many investors. Broadcom offers an annual dividend of $2.36 per share, reflecting a yield of 1.1%. United Microelectronics, however, provides a more substantial annual dividend of $0.35 per share, translating to a notable yield of 6.1%. It's important to note that Broadcom's dividend payout ratio is exceedingly high at 192.5%, suggesting potential concerns over sustainability, while United Microelectronics has a safer payout ratio of 60.3%. With a history of increasing its dividend for 13 years consecutively, Broadcom’s track record is significant, but in this case, United Microelectronics stands out as the superior dividend stock due to its higher yield and more sustainable payout ratio.

Risk and Volatility

The volatility of a stock can impact investment decisions. Broadcom has a beta value of 1.03, indicating it is slightly more volatile than the overall market, while United Microelectronics has a higher beta of 1.17, suggesting its stock price is more volatile compared to the S&P 500.

Summary

In conclusion, Broadcom generally outperforms United Microelectronics in 11 out of the 17 metrics analyzed. This assessment includes various aspects encompassing earnings, profitability, and analyst ratings, among others.

About Broadcom

Broadcom Inc. focuses on designing and manufacturing semiconductor devices that cater to numerous digital and mixed signal applications. The company operates primarily in two divisions: Semiconductor Solutions and Infrastructure Software. Its extensive product offerings include system-on-chips for various applications like set-top boxes, broadband networking, and wireless communication, among others. Founded in 1961, Broadcom is headquartered in Palo Alto, California.

About United Microelectronics

United Microelectronics Corporation is a Taiwanese semiconductor foundry. It specializes in providing services such as circuit design, wafer fabrication, and assembly for both fabless design companies and integrated device manufacturers. Established in 1980, the company has its headquarters in Hsinchu City, Taiwan.

Broadcom, UnitedMicroelectronics, Investing