Critical Comparison: KLA-Tencor Corporation (KLAC) versus Teradyne (NYSE:TER)
KLA-Tencor Corporation (NASDAQ: KLAC) and Teradyne (NYSE:TER) are both mid-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitabiliy, institutional ownership, analyst recommendations, valuation and risk.
Valuation & Earnings
This table compares KLA-Tencor Corporation and Teradyne’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|KLA-Tencor Corporation||$3.46 billion||4.53||$1.35 billion||$5.99||16.68|
|Teradyne||$1.78 billion||3.93||$448.92 million||($0.04)||-878.03|
KLA-Tencor Corporation has higher revenue and earnings than Teradyne. Teradyne is trading at a lower price-to-earnings ratio than KLA-Tencor Corporation, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
KLA-Tencor Corporation has a beta of 1.63, suggesting that its share price is 63% more volatile than the S&P 500. Comparatively, Teradyne has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.
This is a breakdown of current recommendations and price targets for KLA-Tencor Corporation and Teradyne, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
KLA-Tencor Corporation presently has a consensus target price of $93.96, indicating a potential downside of 5.94%. Teradyne has a consensus target price of $31.25, indicating a potential downside of 11.04%. Given KLA-Tencor Corporation’s higher possible upside, analysts clearly believe KLA-Tencor Corporation is more favorable than Teradyne.
This table compares KLA-Tencor Corporation and Teradyne’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider & Institutional Ownership
91.5% of KLA-Tencor Corporation shares are owned by institutional investors. Comparatively, 93.6% of Teradyne shares are owned by institutional investors. 0.3% of KLA-Tencor Corporation shares are owned by insiders. Comparatively, 0.6% of Teradyne shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
KLA-Tencor Corporation pays an annual dividend of $2.16 per share and has a dividend yield of 2.2%. Teradyne pays an annual dividend of $0.28 per share and has a dividend yield of 0.8%. KLA-Tencor Corporation pays out 36.1% of its earnings in the form of a dividend. Teradyne pays out -699.8% 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. KLA-Tencor Corporation has raised its dividend for 2 consecutive years. KLA-Tencor Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
KLA-Tencor Corporation beats Teradyne on 12 of the 18 factors compared between the two stocks.
KLA-Tencor Corporation Company Profile
KLA-Tencor Corporation (KLA-Tencor) is a supplier of process control and yield management solutions for the semiconductor and related nanoelectronics industries. The Company’s products are also used in a number of other high technology industries, including the light emitting diode (LED) and data storage industries, as well as general materials research. Its products and services are used by bare wafer, integrated circuit (IC), lithography reticle (reticle or mask) and disk manufacturers around the world. The Company’s inspection and metrology products and related offerings are categorized in various groups, including Chip Manufacturing, Wafer Manufacturing, Reticle Manufacturing, LED, Power Device and Compound Semiconductor Manufacturing, Data Storage Media/Head Manufacturing, Microelectromechanical Systems (MEMS) Manufacturing, and General Purpose/Lab Applications. It also provides refurbished KLA-Tencor tools as service and support for its products.
Teradyne Company Profile
Teradyne, Inc. supplies automation equipment for test and industrial applications. The Company designs, develops, manufactures and sells automatic test systems used to test semiconductors, wireless products, data storage and complex electronics systems in the consumer electronics, wireless, automotive, industrial, communications, and aerospace and defense industries. Its segments include Semiconductor Test, which includes operations related to the design, manufacturing and marketing of semiconductor test products and services; System Test, which includes operations related to the design, manufacturing and marketing of products and services for defense/aerospace instrumentation test, storage test and circuit-board test; Wireless Test, which includes operations related to the design, manufacturing and marketing of wireless test products and services, and Industrial Automation, which includes operations related to the design, manufacturing and marketing of collaborative robots.
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