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SunPower (NASDAQ:SPWR) and Smart Global (NASDAQ:SGH) are both small-cap oils/energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of recent ratings for SunPower and Smart Global, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SunPower 2 4 0 0 1.67
Smart Global 0 1 4 0 2.80

SunPower currently has a consensus target price of $7.17, indicating a potential downside of 5.95%. Smart Global has a consensus target price of $41.60, indicating a potential upside of 87.30%. Given Smart Global’s stronger consensus rating and higher probable upside, analysts plainly believe Smart Global is more favorable than SunPower.

Earnings & Valuation

This table compares SunPower and Smart Global’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SunPower $1.73 billion 0.62 -$811.09 million ($0.88) -8.66
Smart Global $1.29 billion 0.40 $119.46 million $6.00 3.70

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

Profitability

This table compares SunPower and Smart Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SunPower -46.99% -83.67% -4.06%
Smart Global 7.49% 61.87% 18.20%

Institutional and Insider Ownership

27.6% of SunPower shares are owned by institutional investors. Comparatively, 99.4% of Smart Global shares are owned by institutional investors. 0.9% of SunPower shares are owned by insiders. Comparatively, 4.2% of Smart Global shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

SunPower has a beta of 2.3, suggesting that its share price is 130% more volatile than the S&P 500. Comparatively, Smart Global has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500.

Summary

Smart Global beats SunPower on 11 of the 14 factors compared between the two stocks.

About SunPower

SunPower Corporation researches, develops, manufactures, and delivers solar solutions worldwide. It operates through three segments: Residential, Commercial, and Power Plant. The company provides solar power components, including panels and system components, primarily to dealers, system integrators, and distributors. It also offers commercial rooftop and ground-mounted solar power systems, and residential mounting systems. In addition, the company provides post-installation operations and maintenance services. Further, it leases solar power systems to residential customers; and sells inverters manufactured by third parties. The company also serves investors, financial institutions, project developers, electric utilities, independent power producers, commercial and governmental entities, production home builders, residential owners, and small commercial building owners. The company was incorporated in 1985 and is headquartered in San Jose, California. SunPower Corporation is a subsidiary of Total Solar International SAS.

About Smart Global

SMART Global Holdings, Inc. designs, manufactures, and supplies specialty memory solutions worldwide. The company offers dynamic random access memory (DRAM) components, which are used to manufacture modules and other products; DRAM modules for desktop, notebook, and server applications, as well as for use in smartphones; and specialty DRAM modules for industrial, communications, and networking applications, as well as develops specialized memory module designs based on original equipment manufacturer (OEM) requirements. It also provides flash memory, USB, and serial advanced technology attachment products primarily for use in communications equipment, printers, servers and storage products, switches, and routers; and aerospace, automotive, and defense industries, as well as industrial applications. In addition, the company provides networking, storage, and compute solutions, as well as HPC software to manage and use on premise and cloud computing clusters. Further, it offers supply chain services, including procurement, logistics, inventory management, temporary warehousing, programming, kitting, and packaging. SMART Global Holdings, Inc. sells its products to OEMs through direct sales force and independent sales representatives in North America, Latin America, Asia, and Europe. The company was formerly known as Saleen Holdings, Inc. and changed its name to SMART Global Holdings, Inc. in August 2014. SMART Global Holdings, Inc. was founded in 1988 and is headquartered in Newark, California.

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