Ultra Clean (UCTT) & Acacia Communications (ACIA) Critical Analysis

Ultra Clean (NASDAQ:UCTT) and Acacia Communications (NASDAQ:ACIA) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Profitability

This table compares Ultra Clean and Acacia Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ultra Clean 1.20% 11.20% 5.57%
Acacia Communications 5.63% 4.96% 4.14%

Analyst Recommendations

This is a summary of recent recommendations for Ultra Clean and Acacia Communications, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ultra Clean 0 0 6 0 3.00
Acacia Communications 2 5 8 0 2.40

Ultra Clean currently has a consensus target price of $19.70, suggesting a potential upside of 41.93%. Acacia Communications has a consensus target price of $57.16, suggesting a potential upside of 2.94%. Given Ultra Clean’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Ultra Clean is more favorable than Acacia Communications.

Institutional and Insider Ownership

93.4% of Ultra Clean shares are held by institutional investors. Comparatively, 71.6% of Acacia Communications shares are held by institutional investors. 1.9% of Ultra Clean shares are held by insiders. Comparatively, 9.3% of Acacia Communications shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Ultra Clean has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500. Comparatively, Acacia Communications has a beta of 1.71, indicating that its stock price is 71% more volatile than the S&P 500.

Valuation and Earnings

This table compares Ultra Clean and Acacia Communications’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ultra Clean $1.10 billion 0.50 $36.60 million $1.66 8.36
Acacia Communications $339.89 million 6.63 $4.92 million $0.15 370.20

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

Summary

Ultra Clean beats Acacia Communications on 8 of the 14 factors compared between the two stocks.

Ultra Clean Company Profile

Ultra Clean Holdings, Inc. designs, develops, prototypes, engineers, manufactures, and tests production tools, modules, and subsystems for the semiconductor and display capital equipment industries primarily in North America, Asia, and Europe. It offers precision robotic systems that are used when accurate controlled motion is required; gas delivery systems, which include one or more gas lines consisting of small diameter internally polished stainless steel tubing products, filters, mass flow controllers, regulators, pressure transducers and valves, component heaters, and an integrated electronic and/or pneumatic control system; and various industrial and automation production equipment products. The company also provides subsystems, such as wafer cleaning modules; chemical delivery modules that deliver gases and reactive chemicals in a liquid or gaseous form from a centralized subsystem to the reaction chamber; frame assemblies, which are support structures fabricated from steel tubing or folded sheet metal; and top-plate assemblies. In addition, it offers fluid delivery systems consists of one or more chemical delivery units; process modules, which are the subsystems of semiconductor manufacturing tools that process integrated circuits onto wafers; and other high level assemblies. The company primarily serves original equipment manufacturing customers in the semiconductor capital equipment, consumer, medical, energy, industrial, and research industries. Ultra Clean Holding, Inc. was founded in 1991 and is headquartered in Hayward, California.

Acacia Communications Company Profile

Acacia Communications, Inc. develops, manufactures, and sells high-speed coherent optical interconnect products in the United States, China, Germany, Thailand, and internationally. The company offers embedded and pluggable module products consisting of optical interconnect modules with transmission speeds ranging from 100 to 1,200 gigabits per second for use in long-haul, metro, and inter-data center markets. It also provides semiconductor products, such as low-power coherent digital signal processor application-specific integrated circuits and silicon photonic integrated circuits that are integrated into embedded and pluggable modules. The company sells its products through a direct sales force to network equipment manufacturers, network operators, and cloud service providers. Acacia Communications, Inc. was founded in 2009 and is headquartered in Maynard, Massachusetts.

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