Analyzing TOKYO ELECTRON/ADR (TOELY) & Applied Materials (AMAT)

TOKYO ELECTRON/ADR (NASDAQ: AMAT) and Applied Materials (NASDAQ:AMAT) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, dividends and analyst recommendations.

Dividends

TOKYO ELECTRON/ADR pays an annual dividend of $1.10 per share and has a dividend yield of 2.8%. Applied Materials pays an annual dividend of $0.80 per share and has a dividend yield of 2.0%. TOKYO ELECTRON/ADR pays out 38.2% of its earnings in the form of a dividend. Applied 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.

Profitability

This table compares TOKYO ELECTRON/ADR and Applied Materials’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TOKYO ELECTRON/ADR 17.67% 26.37% 17.33%
Applied Materials 19.87% 58.23% 24.48%

Valuation & Earnings

This table compares TOKYO ELECTRON/ADR and Applied Materials’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TOKYO ELECTRON/ADR $10.21 billion 2.55 $1.84 billion $2.88 13.68
Applied Materials $14.54 billion 2.72 $3.43 billion $3.25 12.39

Applied Materials has higher revenue and earnings than TOKYO ELECTRON/ADR. Applied Materials is trading at a lower price-to-earnings ratio than TOKYO ELECTRON/ADR, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

0.6% of TOKYO ELECTRON/ADR shares are held by institutional investors. Comparatively, 75.4% of Applied Materials shares are held by institutional investors. 0.4% of Applied Materials shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

TOKYO ELECTRON/ADR has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500. Comparatively, Applied Materials has a beta of 1.53, suggesting that its share price is 53% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for TOKYO ELECTRON/ADR and Applied Materials, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TOKYO ELECTRON/ADR 0 0 0 0 N/A
Applied Materials 0 5 16 1 2.82

Applied Materials has a consensus target price of $61.86, indicating a potential upside of 53.62%. Given Applied Materials’ higher probable upside, analysts plainly believe Applied Materials is more favorable than TOKYO ELECTRON/ADR.

Summary

Applied Materials beats TOKYO ELECTRON/ADR on 14 of the 16 factors compared between the two stocks.

TOKYO ELECTRON/ADR Company Profile

Tokyo Electron Limited, together with its subsidiaries, develops, manufactures, distributes, and sells semiconductor and flat panel display (FPD) production equipment in Japan, the United States, Europe, South Korea, Taiwan, China, and internationally. The company's Semiconductor Production Equipment segment offers coaters/developers, plasma etch systems, thermal processing systems, single wafer deposition systems, cleaning systems used in wafer processing, wafer probers used in wafer testing process, electrochemical deposition systems, wafer bonders/debonders, surface preparation systems, test systems, SIC epitaxial CVD systems, gas cluster ion beam systems, and packaging products. Its Flat Panel Display Production Equipment segment provides coaters/developers and plasma etch/ash systems for use in the manufacture of FPDs, as well as inkjet printing systems for manufacturing OLED panels. The company also offers photovoltaic panel production equipment; and logistic, facility maintenance, and insurance services. Tokyo Electron Limited was founded in 1963 and is headquartered in Tokyo, Japan.

Applied Materials Company Profile

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.

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