Lam Research Corporation (NASDAQ: LRCX) and PDF Solutions (NASDAQ:PDFS) are both computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, profitability, dividends, earnings, valuation and institutional ownership.

Volatility & Risk

Lam Research Corporation has a beta of 1.47, indicating that its share price is 47% more volatile than the S&P 500. Comparatively, PDF Solutions has a beta of 1.43, indicating that its share price is 43% more volatile than the S&P 500.

Insider & Institutional Ownership

94.0% of Lam Research Corporation shares are held by institutional investors. Comparatively, 82.5% of PDF Solutions shares are held by institutional investors. 0.5% of Lam Research Corporation shares are held by insiders. Comparatively, 16.2% of PDF Solutions shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Lam Research Corporation pays an annual dividend of $1.80 per share and has a dividend yield of 1.0%. PDF Solutions does not pay a dividend. Lam Research Corporation pays out 19.6% of its earnings in the form of a dividend.

Profitability

This table compares Lam Research Corporation and PDF Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lam Research Corporation 21.19% 26.78% 14.96%
PDF Solutions 5.29% 2.78% 2.49%

Analyst Ratings

This is a summary of recent ratings and target prices for Lam Research Corporation and PDF Solutions, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lam Research Corporation 0 3 17 0 2.85
PDF Solutions 0 2 1 0 2.33

Lam Research Corporation presently has a consensus target price of $179.00, indicating a potential upside of 1.28%. PDF Solutions has a consensus target price of $23.33, indicating a potential upside of 61.36%. Given PDF Solutions’ higher possible upside, analysts plainly believe PDF Solutions is more favorable than Lam Research Corporation.

Valuation and Earnings

This table compares Lam Research Corporation and PDF Solutions’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lam Research Corporation $8.01 billion 3.58 $2.22 billion $9.20 19.21
PDF Solutions $104.27 million 4.48 $9.44 million $0.18 80.33

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

Summary

Lam Research Corporation beats PDF Solutions on 11 of the 16 factors compared between the two stocks.

Lam Research Corporation Company Profile

Lam Research Corporation is a supplier of wafer fabrication equipment and services to the semiconductor industry. The Company designs, manufactures, markets, refurbishes and services semiconductor processing systems that are used in the fabrication of integrated circuits (ICs). It operates through manufacturing and servicing of wafer processing semiconductor manufacturing equipment segment. Its products are designed to enable its customers build a range of devices that are used in a range of electronic products, including cell phones, tablets, computers, storage devices, and networking equipment. Its customer base includes semiconductor memory, foundry, and integrated device manufacturers (IDMs) that make products, such as dynamic random-access memory (DRAM), negative-AND (NAND) memory and logic devices. It offers a portfolio of products that are used in several areas of the semiconductor manufacturing process flow, including thin film deposition, plasma etch and single-wafer clean.

PDF Solutions Company Profile

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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