Critical Analysis: Wolfspeed (NYSE:WOLF) versus EMCORE (NASDAQ:EMKR)

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

Volatility and Risk

Wolfspeed has a beta of 1.53, indicating that its share price is 53% more volatile than the S&P 500. Comparatively, EMCORE has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500.

Profitability

This table compares Wolfspeed and EMCORE’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wolfspeed	-107.93%	-37.76%	-5.36%
EMCORE	-81.08%	-25.05%	-13.56%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Wolfspeed and EMCORE, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wolfspeed	1	11	4	0	2.19
EMCORE	0	3	0	0	2.00

Wolfspeed currently has a consensus target price of $24.53, indicating a potential upside of 222.81%. EMCORE has a consensus target price of $1.00, indicating a potential downside of 4.76%. Given Wolfspeed’s stronger consensus rating and higher probable upside, analysts plainly believe Wolfspeed is more favorable than EMCORE.

Institutional & Insider Ownership

65.7% of EMCORE shares are owned by institutional investors. 0.6% of Wolfspeed shares are owned by insiders. Comparatively, 0.9% of EMCORE shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Wolfspeed and EMCORE’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wolfspeed	$807.20 million	1.19	-$864.20 million	($6.46)	-1.18
EMCORE	$97.72 million	0.10	-$75.36 million	($8.70)	-0.12

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

Summary

Wolfspeed beats EMCORE on 8 of the 14 factors compared between the two stocks.

About Wolfspeed

Wolfspeed, Inc. operates as a powerhouse semiconductor company focuses on silicon carbide and gallium nitride (GaN) technologies in Europe, Hong Kong, China, rest of Asia-Pacific, the United States, and internationally. It offers silicon carbide and GaN materials, including silicon carbide bare wafers, epitaxial wafers, and GaN epitaxial layers on silicon carbide wafers to manufacture products for RF, power, and other applications. The company also provides power devices, such as silicon carbide Schottky diodes, metal oxide semiconductor field effect transistors (MOSFETs), and power modules for customers and distributors to use in applications, including electric vehicles comprising charging infrastructure, server power supplies, solar inverters, uninterruptible power supplies, industrial power supplies, and other applications. In addition, it offers RF devices comprising GaN-based die, high-electron mobility transistors, monolithic microwave integrated circuits, and laterally diffused MOSFET power transistors for telecommunications infrastructure, military, and other commercial applications. The company was formerly known as Cree, Inc. and changed its name to Wolfspeed, Inc. in October 2021. Wolfspeed, Inc. was incorporated in 1987 and is headquartered in Durham, North Carolina.

About EMCORE

EMCORE Corporation, together with its subsidiaries, designs and manufactures fiber optic gyro, ring laser gyro, and micro electromechanical system-based inertial sensors and systems in the United States and internationally. It offers navigation system and inertial sensing products, such as gyroscopes and multi-axis sensors, inertial measurement units, fiber optic gyroscopes, quartz micro electromechanical systems, inertial navigation systems, tactical navigation, and naval and amphibious navigation, as well as radar positioning and pointing systems, and battlefield/artillery survey systems. The company sells its products through direct sales force, application engineers, third-party sales representatives, and distributors. EMCORE Corporation was founded in 1984 and is headquartered in Alhambra, California.