KLA-Tencor (NASDAQ: KLAC) and II-VI (NASDAQ:IIVI) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, valuation, profitability, risk, analyst recommendations and institutional ownership.

Profitability

This table compares KLA-Tencor and II-VI’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KLA-Tencor 18.17% 86.87% 21.05%
II-VI 8.41% 10.75% 6.34%

Insider & Institutional Ownership

91.1% of KLA-Tencor shares are held by institutional investors. Comparatively, 95.8% of II-VI shares are held by institutional investors. 0.2% of KLA-Tencor shares are held by insiders. Comparatively, 3.8% of II-VI shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares KLA-Tencor and II-VI’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
KLA-Tencor $3.48 billion 5.07 $926.07 million $5.94 19.04
II-VI $972.05 million 3.10 $95.27 million $1.48 32.53

KLA-Tencor has higher revenue and earnings than II-VI. KLA-Tencor is trading at a lower price-to-earnings ratio than II-VI, indicating that it is currently the more affordable of the two stocks.

Dividends

KLA-Tencor pays an annual dividend of $3.00 per share and has a dividend yield of 2.7%. II-VI does not pay a dividend. KLA-Tencor pays out 50.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for KLA-Tencor and II-VI, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KLA-Tencor 0 2 12 0 2.86
II-VI 0 1 9 0 2.90

KLA-Tencor currently has a consensus price target of $128.21, suggesting a potential upside of 13.34%. II-VI has a consensus price target of $51.70, suggesting a potential upside of 7.37%. Given KLA-Tencor’s higher probable upside, equities research analysts clearly believe KLA-Tencor is more favorable than II-VI.

Volatility and Risk

KLA-Tencor has a beta of 1.52, indicating that its stock price is 52% more volatile than the S&P 500. Comparatively, II-VI has a beta of 0.16, indicating that its stock price is 84% less volatile than the S&P 500.

Summary

KLA-Tencor beats II-VI on 11 of the 16 factors compared between the two stocks.

KLA-Tencor Company Profile

KLA-Tencor Corporation designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nano-electronics industries worldwide. It offers chip manufacturing products, such as front-end defect inspection tools, defect review systems, advanced packaging process control systems, metrology solutions, in-situ process monitoring products, and lithography software; wafer manufacturing products comprising wafer manufacturing products comprising surface and defect inspection, wafer geometry and nanotopography metrology, and data management; and reticle manufacturing products, such as defect inspection and pattern placement metrology products. The company also provides light emitting diode (LED), power device, and compound semiconductor manufacturing products consisting of patterned wafer inspection, defect inspection, surface metrology, and data management products; thin-film head metrology and inspection, virtual lithography, in-situ process monitoring, transparent and metal substrate inspection, and data management products for data storage media/head manufacturing; and stylus and optical profiling, and optical inspection products for microelectromechanical systems manufacturing, as well as products for general purpose/lab applications. It offers its products and services for bare wafer, IC, lithography reticle, and disk manufacturers. KLA-Tencor Corporation was founded in 1975 and is headquartered in Milpitas, California.

II-VI Company Profile

II-VI Incorporated provides engineered materials and optoelectronic components worldwide. The company is a vertically integrated manufacturing company that develops innovative products for various applications in the industrial, optical communications, military, life sciences, semiconductor equipment, and consumer markets. It produces a range of application-specific photonic and electronic materials and components, and deploys them in various forms, including integrated with advanced software to enable its customers. The company serves OEMs, laser end-users, system integrators of high-power lasers, manufacturers of equipment and devices for the industrial, optical communications, military, semiconductor, medical and life science markets, consumers, the U.S. government prime contractors, various U.S. government agencies, and thermoelectric integrators. It markets its products through a direct sales force, representatives, and distributors. The company was founded in 1971 and is headquartered in Saxonburg, Pennsylvania.

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