Ultratech (NASDAQ: UTEK) and Ultra Clean Holdings (NASDAQ:UCTT) are both small-cap semiconductor equipment & testing – nec companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Insider & Institutional Ownership

92.7% of Ultratech shares are held by institutional investors. Comparatively, 76.2% of Ultra Clean Holdings shares are held by institutional investors. 5.9% of Ultratech shares are held by company insiders. Comparatively, 2.6% of Ultra Clean Holdings 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.

Analyst Recommendations

This is a breakdown of current recommendations for Ultratech and Ultra Clean Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ultratech 0 3 0 0 2.00
Ultra Clean Holdings 0 2 4 0 2.67

Ultratech presently has a consensus price target of $28.88, suggesting a potential downside of 4.47%. Ultra Clean Holdings has a consensus price target of $31.00, suggesting a potential upside of 26.79%. Given Ultra Clean Holdings’ stronger consensus rating and higher possible upside, analysts plainly believe Ultra Clean Holdings is more favorable than Ultratech.

Risk and Volatility

Ultratech has a beta of 0.46, indicating that its share price is 54% less volatile than the S&P 500. Comparatively, Ultra Clean Holdings has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Ultratech 5.17% 3.22% 2.83%
Ultra Clean Holdings 7.55% 30.08% 16.80%

Valuation and Earnings

This table compares Ultratech and Ultra Clean Holdings’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Ultratech N/A N/A N/A $0.57 53.04
Ultra Clean Holdings $562.76 million 1.46 $10.05 million $1.88 13.01

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

Summary

Ultra Clean Holdings beats Ultratech on 9 of the 11 factors compared between the two stocks.

Ultratech Company Profile

Ultratech, Inc. (Ultratech) develops, manufactures and markets photolithography, laser thermal processing and inspection equipment. The Company operates through the manufacture and distribution of capital equipment to manufacturers of integrated circuits and nanotechnology components segment. The Company serves manufacturers of semiconductor devices, including packaging processes and various nanotechnology components such as laser diodes, high-brightness light emitting diodes (HBLEDs) and micro-electro-mechanical systems (MEMS), as well as atomic layer deposition systems (ALD) for customers located throughout the world. It has operations in North America, Europe, Singapore, Japan, Taiwan, Korea and the rest of Asia. The Company supplies step-and-repeat photolithography systems based on one-to-one (1X) imaging technology to customers located throughout North America, Europe and Asia.

Ultra Clean Holdings Company Profile

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.

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