Reviewing International Business Machines (NYSE:IBM) and FARO Technologies (NASDAQ:FARO)

International Business Machines (NYSE:IBM) and FARO Technologies (NASDAQ:FARO) are both computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, earnings, valuation, profitability and analyst recommendations.

Profitability

This table compares International Business Machines and FARO Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
International Business Machines	8.71%	37.43%	7.00%
FARO Technologies	-0.26%	-0.35%	-0.18%

Insider & Institutional Ownership

59.0% of International Business Machines shares are held by institutional investors. Comparatively, 97.2% of FARO Technologies shares are held by institutional investors. 0.2% of International Business Machines shares are held by insiders. Comparatively, 2.4% of FARO Technologies shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares International Business Machines and FARO Technologies”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
International Business Machines	$62.75 billion	4.33	$6.02 billion	$5.81	50.34
FARO Technologies	$342.43 million	2.47	-$9.07 million	($0.05)	-876.40

International Business Machines has higher revenue and earnings than FARO Technologies. FARO Technologies is trading at a lower price-to-earnings ratio than International Business Machines, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for International Business Machines and FARO Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
International Business Machines	1	8	8	1	2.50
FARO Technologies	0	2	0	0	2.00

International Business Machines currently has a consensus target price of $253.75, indicating a potential downside of 13.24%. FARO Technologies has a consensus target price of $35.50, indicating a potential downside of 18.99%. Given International Business Machines’ stronger consensus rating and higher probable upside, equities analysts plainly believe International Business Machines is more favorable than FARO Technologies.

Risk & Volatility

International Business Machines has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500. Comparatively, FARO Technologies has a beta of 1.63, indicating that its stock price is 63% more volatile than the S&P 500.

Summary

International Business Machines beats FARO Technologies on 12 of the 15 factors compared between the two stocks.

About International Business Machines

International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services worldwide. The company operates through Software, Consulting, Infrastructure, and Financing segments. The Software segment offers a hybrid cloud and AI platforms that allows clients to realize their digital and AI transformations across the applications, data, and environments in which they operate. The Consulting segment focuses on skills integration for strategy, experience, technology, and operations by domain and industry. The Infrastructure segment provides on-premises and cloud based server, and storage solutions, as well as life-cycle services for hybrid cloud infrastructure deployment. The Financing segment offers client and commercial financing, facilitates IBM clients’ acquisition of hardware, software, and services. The company has a strategic partnership to various companies including hyperscalers, service providers, global system integrators, and software and hardware vendors that includes Adobe, Amazon Web services, Microsoft, Oracle, Salesforce, Samsung Electronics and SAP, and others. The company was formerly known as Computing-Tabulating-Recording Co. International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.

About FARO Technologies

FARO Technologies, Inc. designs, develops, manufactures, markets, and supports software driven three-dimensional measurement, imaging, and realization solutions worldwide. The company offers FaroArm, a combination of a portable articulated measurement arm, a computer, and CAM2 software programs; FARO Laser Tracker, a combination of a portable large-volume laser measurement tool, a computer, and CAM2 software programs; FARO Laser Projector, which provides a virtual template that operators and assemblers can use to position components; FARO Laser Scanning Portfolio to measure and collect a cloud of data points for 3D rendering of an object or area; and FARO Mobile Laser Portfolio provides 3D scanning while attached to other mobile devices, such as drones for metrology, reverse engineering, factory automation, building information modeling, public safety, and other applications. It also provides FARO Software, a software solution that integrate with FARO hardware products to merge data and provide collaborative workflows and applications. It sells its products to automotive, aerospace, and metal and machine fabrication industries. FARO Technologies, Inc. was founded in 1981 and is headquartered in Lake Mary, Florida.