Applied Materials (NASDAQ: AMAT) and KLA-Tencor (NASDAQ:KLAC) are both large-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.
Applied Materials pays an annual dividend of $0.40 per share and has a dividend yield of 0.7%. KLA-Tencor pays an annual dividend of $2.36 per share and has a dividend yield of 2.1%. Applied Materials pays out 15.1% of its earnings in the form of a dividend. KLA-Tencor pays out 56.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
This table compares Applied Materials and KLA-Tencor’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Applied Materials||$14.54 billion||4.30||$3.43 billion||$2.65||22.43|
|KLA-Tencor||$3.48 billion||5.10||$926.07 million||$4.15||27.46|
Applied Materials has higher revenue and earnings than KLA-Tencor. Applied Materials is trading at a lower price-to-earnings ratio than KLA-Tencor, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and recommmendations for Applied Materials and KLA-Tencor, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Applied Materials presently has a consensus price target of $65.09, suggesting a potential upside of 9.53%. KLA-Tencor has a consensus price target of $122.08, suggesting a potential upside of 7.12%. Given Applied Materials’ stronger consensus rating and higher possible upside, analysts plainly believe Applied Materials is more favorable than KLA-Tencor.
This table compares Applied Materials and KLA-Tencor’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility & Risk
Applied Materials has a beta of 1.58, suggesting that its stock price is 58% more volatile than the S&P 500. Comparatively, KLA-Tencor has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500.
Institutional and Insider Ownership
79.3% of Applied Materials shares are owned by institutional investors. Comparatively, 91.3% of KLA-Tencor shares are owned by institutional investors. 0.4% of Applied Materials shares are owned by company insiders. Comparatively, 0.2% of KLA-Tencor shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Applied Materials beats KLA-Tencor on 11 of the 17 factors compared between the two stocks.
About Applied Materials
Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, display, and related industries worldwide. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits. It offers products and technologies for transistor and interconnect fabrication, including epitaxy, ion implantation, oxidation and nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays, organic light-emitting diodes, and other display technologies for TVs, personal computers, electronic tablets, smart phones, and other consumer-oriented devices, as well as equipment for flexible substrates. The company serves manufacturers of semiconductor wafers and chips, liquid crystal and organic light-emitting diode displays, and other electronic devices. Applied Materials, Inc. was founded in 1967 and is headquartered in Santa Clara, California.
KLA-Tencor Corporation (KLA-Tencor) is a supplier of process control and yield management solutions for the semiconductor and related nanoelectronics industries. The Company’s products are also used in a number of other high technology industries, including the light emitting diode (LED) and data storage industries, as well as general materials research. Its products and services are used by bare wafer, integrated circuit (IC), lithography reticle (reticle or mask) and disk manufacturers around the world. The Company’s inspection and metrology products and related offerings are categorized in various groups, including Chip Manufacturing, Wafer Manufacturing, Reticle Manufacturing, LED, Power Device and Compound Semiconductor Manufacturing, Data Storage Media/Head Manufacturing, Microelectromechanical Systems (MEMS) Manufacturing, and General Purpose/Lab Applications. It also provides refurbished KLA-Tencor tools as service and support for its products.
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