MKS Instruments (NASDAQ:MKSI) and CMC Materials (NASDAQ:CCMP) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.
Analyst Ratings
This is a breakdown of recent ratings and recommmendations for MKS Instruments and CMC Materials, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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MKS Instruments | 0 | 2 | 8 | 0 | 2.80 |
CMC Materials | 2 | 4 | 3 | 0 | 2.11 |
MKS Instruments presently has a consensus target price of $180.00, suggesting a potential downside of 5.99%. CMC Materials has a consensus target price of $155.25, suggesting a potential downside of 19.55%. Given MKS Instruments' stronger consensus rating and higher possible upside, research analysts clearly believe MKS Instruments is more favorable than CMC Materials.
Institutional and Insider Ownership
94.0% of MKS Instruments shares are held by institutional investors. Comparatively, 87.2% of CMC Materials shares are held by institutional investors. 1.1% of MKS Instruments shares are held by insiders. Comparatively, 2.4% of CMC Materials shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Profitability
This table compares MKS Instruments and CMC Materials' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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MKS Instruments | 12.78% | 16.49% | 9.74% |
CMC Materials | 12.79% | 21.30% | 9.14% |
Volatility and Risk
MKS Instruments has a beta of 1.6, suggesting that its share price is 60% more volatile than the S&P 500. Comparatively, CMC Materials has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500.
Dividends
MKS Instruments pays an annual dividend of $0.80 per share and has a dividend yield of 0.4%. CMC Materials pays an annual dividend of $1.84 per share and has a dividend yield of 1.0%. MKS Instruments pays out 17.7% of its earnings in the form of a dividend. CMC Materials pays out 24.6% 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. MKS Instruments has increased its dividend for 1 consecutive years and CMC Materials has increased its dividend for 4 consecutive years. CMC Materials is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares MKS Instruments and CMC Materials' gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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MKS Instruments | $1.90 billion | 5.57 | $140.39 million | $4.52 | 42.36 |
CMC Materials | $1.12 billion | 5.04 | $142.83 million | $7.47 | 25.83 |
CMC Materials has lower revenue, but higher earnings than MKS Instruments. CMC Materials is trading at a lower price-to-earnings ratio than MKS Instruments, indicating that it is currently the more affordable of the two stocks.
Summary
MKS Instruments beats CMC Materials on 9 of the 17 factors compared between the two stocks.