Ultratech (NASDAQ: UTEK) and FormFactor (NASDAQ:FORM) are both small-cap technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.

Insider & Institutional Ownership

92.7% of Ultratech shares are owned by institutional investors. Comparatively, 84.3% of FormFactor shares are owned by institutional investors. 5.9% of Ultratech shares are owned by insiders. Comparatively, 2.3% of FormFactor shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Ultratech and FormFactor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ultratech 5.17% 3.22% 2.83%
FormFactor 3.68% 16.80% 11.20%

Analyst Ratings

This is a breakdown of current ratings and target prices for Ultratech and FormFactor, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ultratech 0 3 0 0 2.00
FormFactor 0 1 5 0 2.83

Ultratech currently has a consensus price target of $28.88, suggesting a potential downside of 4.47%. FormFactor has a consensus price target of $18.40, suggesting a potential upside of 17.95%. Given FormFactor’s stronger consensus rating and higher possible upside, analysts clearly believe FormFactor is more favorable than Ultratech.

Volatility & Risk

Ultratech has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500. Comparatively, FormFactor has a beta of 1.47, meaning that its share price is 47% more volatile than the S&P 500.

Earnings and Valuation

This table compares Ultratech and FormFactor’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ultratech N/A N/A N/A $0.57 53.04
FormFactor $383.88 million 2.97 -$6.55 million $0.26 60.00

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

Summary

FormFactor beats Ultratech on 7 of the 11 factors compared between the two stocks.

About Ultratech

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.

About FormFactor

FormFactor, Inc. is a provider of test and measurement solutions. The Company’s segments include the Probe Cards segment and Systems segment. The Company designs, manufactures and sells multiple product lines, including probe cards, analytical probes, probe stations, integrated measurement systems, thermal sub-systems, reliability test systems, and related services. Its products provide electrical information from a range of semiconductor and electro-optical devices and integrated circuits (devices) from development to production. Probe Cards segment consists of probe card products and analytical probes. Systems segment consists of wafer probing, thermal and reliability products to enable precision on-wafer measurement of integrated circuits. Systems products are used in the early phases of the development and characterization of semiconductor processes.

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