Ultra Clean Holdings (NASDAQ: UCTT) and PDF Solutions (NASDAQ:PDFS) are both small-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitabiliy, risk and valuation.

Risk and Volatility

Ultra Clean Holdings has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, PDF Solutions has a beta of 1.49, meaning that its stock price is 49% more volatile than the S&P 500.

Earnings & Valuation

This table compares Ultra Clean Holdings and PDF Solutions’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ultra Clean Holdings $655.12 million 1.12 $54.21 million $0.82 27.07
PDF Solutions $106.67 million 5.81 $13.54 million $0.24 80.38

Ultra Clean Holdings has higher revenue and earnings than PDF Solutions. Ultra Clean Holdings is trading at a lower price-to-earnings ratio than PDF Solutions, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ultra Clean Holdings and PDF Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ultra Clean Holdings 4.22% 17.24% 9.71%
PDF Solutions 7.07% 4.31% 3.87%

Institutional & Insider Ownership

85.3% of Ultra Clean Holdings shares are held by institutional investors. Comparatively, 77.4% of PDF Solutions shares are held by institutional investors. 2.6% of Ultra Clean Holdings shares are held by company insiders. Comparatively, 16.2% of PDF Solutions shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Ultra Clean Holdings and PDF Solutions, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ultra Clean Holdings 0 3 2 0 2.40
PDF Solutions 0 1 2 0 2.67

Ultra Clean Holdings currently has a consensus price target of $19.38, indicating a potential downside of 12.73%. PDF Solutions has a consensus price target of $26.00, indicating a potential upside of 34.78%. Given PDF Solutions’ stronger consensus rating and higher possible upside, analysts plainly believe PDF Solutions is more favorable than Ultra Clean Holdings.

Summary

PDF Solutions beats Ultra Clean Holdings on 7 of the 13 factors compared between the two stocks.

About Ultra Clean Holdings

Ultra Clean Holdings, Inc. is engaged in the design, engineering and manufacture of production tools, modules and subsystems the semiconductor capital equipment industry. The Company’s products include precision robotic solutions; gas delivery systems; a range of industrial and automation production equipment products; subsystems that includes wafer cleaning sub-systems, chemical delivery modules, top-plate assemblies, frame assemblies, and process modules. The Company offers its products for the semiconductor capital equipment and equipment industry segments. It also sells to the consumer, medical, energy, industrial, flat panel and research equipment industries. The Company is focused on providing specialized engineering and manufacturing solutions for these applications. It provides its original equipment manufacturing (OEM) customers an outsourced solution for the development, design, component sourcing, prototyping, engineering, manufacturing and testing of various systems.

About PDF Solutions

PDF Solutions, Inc. is a provider of infrastructure technologies and services for integrated circuits (IC). The Company’s technologies and services focus on the IC manufacturing process life cycle. It operates in the segment of licensing and implementation of yield improvement solutions for integrated circuit manufacturers. The Company’s solutions combine software, test chips, an electrical wafer test system, methodologies and professional services. The Company has developed solutions for yield simulation, analysis, loss detection, and improvement. Its characterization vehicle infrastructure (CVi) enables customers to electrically characterize the manufacturing process, and establish fail-rate information needed to calibrate manufacturing yield models and prioritize yield improvement activities. Its Exensio YieldAware solution combines software and services to enable customers to collect and combine product test data and equipment signals during production.

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