Analyzing SkyWater Technology (NASDAQ:SKYT) and Wolfspeed (NYSE:WOLF)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Wolfspeed	-125.96%	-70.84%	-6.58%
SkyWater Technology	-4.75%	-12.40%	-2.47%

Earnings and Valuation

This table compares Wolfspeed and SkyWater Technology”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wolfspeed	$776.60 million	1.12	-$864.20 million	($7.68)	-0.89
SkyWater Technology	$286.68 million	1.61	-$30.76 million	($0.35)	-27.66

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

Insider & Institutional Ownership

70.0% of SkyWater Technology shares are held by institutional investors. 0.8% of Wolfspeed shares are held by company insiders. Comparatively, 42.6% of SkyWater Technology shares are held by company 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.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Wolfspeed and SkyWater Technology, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wolfspeed	2	10	4	0	2.13
SkyWater Technology	0	0	4	0	3.00

Wolfspeed currently has a consensus target price of $14.86, indicating a potential upside of 118.33%. SkyWater Technology has a consensus target price of $12.75, indicating a potential upside of 31.71%. Given Wolfspeed’s higher probable upside, equities research analysts plainly believe Wolfspeed is more favorable than SkyWater Technology.

Volatility and Risk

Wolfspeed has a beta of 1.43, indicating that its stock price is 43% more volatile than the S&P 500. Comparatively, SkyWater Technology has a beta of 3.36, indicating that its stock price is 236% more volatile than the S&P 500.

Summary

SkyWater Technology beats Wolfspeed on 10 of the 12 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 SkyWater Technology

SkyWater Technology, Inc., together with its subsidiaries, operates as a pure-play technology foundry that engages in the provision of semiconductor development, manufacturing, and packaging services in the United States. The company offers engineering and process development support services to co-create technologies with customers; and semiconductor manufacturing services for various silicon-based analog and mixed-signal, micro-electromechanical systems, and rad-hard integrated circuits. It serves customers operating in the computation, aerospace and defense, automotive, bio-health, consumer, and industrial sectors. The company was incorporated in 2016 and is headquartered in Bloomington, Minnesota.