Financial Review: Exfo (EXFO) vs. MKS Instruments (NASDAQ:MKSI)

Exfo (NASDAQ: EXFO) and MKS Instruments (NASDAQ:MKSI) are both testing & measuring equipment companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, earnings, risk and valuation.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Exfo and MKS Instruments, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Exfo 0 4 1 0 2.20
MKS Instruments 0 0 4 0 3.00

Exfo presently has a consensus price target of $5.35, indicating a potential upside of 24.42%. MKS Instruments has a consensus price target of $109.75, indicating a potential upside of 16.14%. Given Exfo’s higher probable upside, research analysts clearly believe Exfo is more favorable than MKS Instruments.

Profitability

This table compares Exfo and MKS Instruments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Exfo 0.35% 5.26% 3.99%
MKS Instruments 16.97% 21.21% 12.66%

Earnings & Valuation

This table compares Exfo and MKS Instruments’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Exfo $243.30 million 0.97 $850,000.00 $0.01 430.00
MKS Instruments $1.30 billion 3.96 $104.80 million $5.58 16.94

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

Risk & Volatility

Exfo has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500. Comparatively, MKS Instruments has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Dividends

MKS Instruments pays an annual dividend of $0.72 per share and has a dividend yield of 0.8%. Exfo does not pay a dividend. MKS Instruments pays out 12.9% of its earnings in the form of a dividend.

Insider & Institutional Ownership

16.1% of Exfo shares are owned by institutional investors. Comparatively, 95.4% of MKS Instruments shares are owned by institutional investors. 20.0% of Exfo shares are owned by insiders. Comparatively, 1.7% of MKS Instruments 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.

Summary

MKS Instruments beats Exfo on 12 of the 16 factors compared between the two stocks.

About Exfo

EXFO Inc is a Canada-based company, which provides communications service providers (CSPs) and data center, cloud and Web-scale operators with field test, service assurance and analytics solutions to ensure the deployment, maintenance and management of physical, virtual, fixed and mobile networks. It focuses on network infrastructures: fourth generation (4G)/long-term evolution (LTE), wireless backhaul, small cells and distributed antenna systems (DAS), 100G network upgrades and fiber-to-the-home (FTTH)/fiber-to-the-curb (FTTC)/fiber-to-the-node (FTTN) deployments. It offers a range of wire line and wireless tests, service assurance and analytics solutions to the global telecommunications industry. Its products include TestFlow; LTB-8 platform; a family of optical time domain reflect meters (OTDRs); iSAM; MaxTester-940 Fiber Certifier optical loss test set (OLTS) for data center and enterprise markets, and the G.fast handheld test set.

About MKS Instruments

MKS Instruments, Inc. is a global provider of instruments, subsystems and process control solutions that measures, controls, powers, delivers, monitors and analyzes critical parameters of advanced manufacturing processes. The Company operates through two segments, including the Vacuum & Analysis segment and the Light & Motion segment. The Vacuum & Analysis segment provides a range of instruments, components, subsystems and software, which are derived from its core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, residual gas analysis, leak detection, control and information technology, ozone generation and delivery, radio frequency (RF) and direct current (DC) power, reactive gas generation and vacuum technology. The Light & Motion segment provides a range of instruments, components and subsystems, which are derived from its core competencies in lasers, photonics and optics.

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