Brooks Automation (NASDAQ:BRKS) and Lam Research (NASDAQ:LRCX) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.
Earnings and Valuation
This table compares Brooks Automation and Lam Research's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Brooks Automation | $897.27 million | 7.39 | $64.85 million | $1.26 | 70.93 |
Lam Research | $10.04 billion | 8.52 | $2.25 billion | $15.95 | 37.54 |
Lam Research has higher revenue and earnings than Brooks Automation. Lam Research is trading at a lower price-to-earnings ratio than Brooks Automation, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
95.3% of Brooks Automation shares are owned by institutional investors. Comparatively, 84.0% of Lam Research shares are owned by institutional investors. 1.6% of Brooks Automation shares are owned by insiders. Comparatively, 0.3% of Lam Research 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.
Dividends
Brooks Automation pays an annual dividend of $0.40 per share and has a dividend yield of 0.4%. Lam Research pays an annual dividend of $5.20 per share and has a dividend yield of 0.9%. Brooks Automation pays out 31.7% of its earnings in the form of a dividend. Lam Research pays out 32.6% 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. Brooks Automation has increased its dividend for 1 consecutive years and Lam Research has increased its dividend for 3 consecutive years. Lam Research is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a breakdown of current ratings and target prices for Brooks Automation and Lam Research, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Brooks Automation | 0 | 2 | 6 | 0 | 2.75 |
Lam Research | 0 | 4 | 21 | 0 | 2.84 |
Brooks Automation currently has a consensus price target of $79.3750, suggesting a potential downside of 11.18%. Lam Research has a consensus price target of $478.88, suggesting a potential downside of 20.03%. Given Brooks Automation's higher probable upside, research analysts clearly believe Brooks Automation is more favorable than Lam Research.
Profitability
This table compares Brooks Automation and Lam Research's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Brooks Automation | 7.23% | 7.95% | 6.13% |
Lam Research | 23.60% | 55.82% | 20.06% |
Volatility & Risk
Brooks Automation has a beta of 1.97, meaning that its share price is 97% more volatile than the S&P 500. Comparatively, Lam Research has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.
Summary
Lam Research beats Brooks Automation on 11 of the 17 factors compared between the two stocks.