Financial Analysis: Ultra Clean (UCTT) versus Brooks Automation (BRKS)

Ultra Clean (NASDAQ: UCTT) and Brooks Automation (NASDAQ:BRKS) are both small-cap technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, valuation, analyst recommendations, institutional ownership, profitability and dividends.

Analyst Ratings

This is a summary of current recommendations and price targets for Ultra Clean and Brooks Automation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ultra Clean 0 0 5 0 3.00
Brooks Automation 0 2 5 0 2.71

Ultra Clean presently has a consensus target price of $32.40, indicating a potential upside of 20.54%. Brooks Automation has a consensus target price of $32.43, indicating a potential upside of 17.88%. Given Ultra Clean’s stronger consensus rating and higher probable upside, equities analysts clearly believe Ultra Clean is more favorable than Brooks Automation.

Earnings & Valuation

This table compares Ultra Clean and Brooks Automation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ultra Clean $562.76 million 1.61 $10.05 million $1.88 14.30
Brooks Automation $692.89 million 2.80 $62.61 million $0.89 30.91

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

Volatility & Risk

Ultra Clean has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500. Comparatively, Brooks Automation has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500.

Profitability

This table compares Ultra Clean and Brooks Automation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ultra Clean 7.55% 28.77% 16.02%
Brooks Automation 9.04% 13.40% 10.62%

Institutional & Insider Ownership

75.5% of Ultra Clean shares are held by institutional investors. Comparatively, 89.9% of Brooks Automation shares are held by institutional investors. 2.6% of Ultra Clean shares are held by company insiders. Comparatively, 2.4% of Brooks Automation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Brooks Automation pays an annual dividend of $0.40 per share and has a dividend yield of 1.5%. Ultra Clean does not pay a dividend. Brooks Automation pays out 44.9% of its earnings in the form of a dividend.

Summary

Ultra Clean beats Brooks Automation on 8 of the 15 factors compared between the two stocks.

About Ultra Clean

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.

About Brooks Automation

Brooks Automation, Inc. is a provider of automation and cryogenic solutions for various applications and markets. The Company operates through two segments: Brooks Semiconductor Solutions Group and Brooks Life Science Systems. The Brooks Semiconductor Solutions Group segment offers critical automated transport, vacuum and contamination controls solutions and services. Its product offerings include robots and integrated automation systems for handling of substrates. It is also a provider of cryogenic components to create vacuum and thermal stability within critical operating environments in the manufacturing process. It also offers equipment for automated contamination control, conditioning and metrology solutions for wafer and reticle carriers. The Brooks Life Science Systems segment offers sample life cycle management solutions that provide life science and bioscience customers with a range of sample management solutions for scientific research and support drug development.

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