PDF Solutions (PDFS) and Photronics (NASDAQ:PLAB) Critical Contrast

Photronics (NASDAQ: PLAB) and PDF Solutions (NASDAQ:PDFS) are both small-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Insider & Institutional Ownership

94.1% of Photronics shares are owned by institutional investors. Comparatively, 86.7% of PDF Solutions shares are owned by institutional investors. 3.7% of Photronics shares are owned by insiders. Comparatively, 15.0% of PDF Solutions shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Photronics and PDF Solutions’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Photronics $450.68 million 1.21 $13.13 million $0.20 39.50
PDF Solutions $107.46 million 3.94 $9.10 million $0.14 94.64

Photronics has higher revenue and earnings than PDF Solutions. Photronics is trading at a lower price-to-earnings ratio than PDF Solutions, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Photronics has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500. Comparatively, PDF Solutions has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Photronics and PDF Solutions, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Photronics 0 0 1 0 3.00
PDF Solutions 0 1 1 0 2.50

Photronics presently has a consensus price target of $13.00, suggesting a potential upside of 64.56%. PDF Solutions has a consensus price target of $20.00, suggesting a potential upside of 50.94%. Given Photronics’ stronger consensus rating and higher possible upside, analysts clearly believe Photronics is more favorable than PDF Solutions.

Profitability

This table compares Photronics and PDF Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Photronics 2.91% 1.55% 1.30%
PDF Solutions 4.08% 2.10% 1.88%

Summary

PDF Solutions beats Photronics on 7 of the 13 factors compared between the two stocks.

About Photronics

Photronics, Inc. is a manufacturer of photomasks, which are photographic quartz plates containing microscopic images of electronic circuits. As of October 30, 2016, the Company operated principally from nine manufacturing facilities: two located in Europe, three in Taiwan, one in Korea and three in the United States. Photomasks are used in the manufacture of semiconductors and flat panel displays (FPDs), and are used as masters to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits (ICs), and a range of FPDs and other types of electrical and optical components. The Company offers reticle and photomask maintenance, including pellicle replacement, mask cleaning and re-certification, at all its sites across the world. Its products include Mature Binary, Advanced Binary Reticles, Phase Shift Masks-Embedded Attenuated Phase Shift Masks (EAPSM), Other Advanced Products and Large Area Masks.

About PDF Solutions

PDF Solutions, Inc. is a provider of infrastructure technologies and services for integrated circuits (IC). The Company’s technologies and services focus on the IC manufacturing process life cycle. It operates in the segment of licensing and implementation of yield improvement solutions for integrated circuit manufacturers. The Company’s solutions combine software, test chips, an electrical wafer test system, methodologies and professional services. The Company has developed solutions for yield simulation, analysis, loss detection, and improvement. Its characterization vehicle infrastructure (CVi) enables customers to electrically characterize the manufacturing process, and establish fail-rate information needed to calibrate manufacturing yield models and prioritize yield improvement activities. Its Exensio YieldAware solution combines software and services to enable customers to collect and combine product test data and equipment signals during production.

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