Comparing Fortive (NYSE:FTV) and Lam Research (LRCX)

Lam Research (NASDAQ: LRCX) and Fortive (NYSE:FTV) are both large-cap technology companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, earnings, risk, analyst recommendations, institutional ownership, dividends and valuation.

Institutional and Insider Ownership

92.5% of Lam Research shares are owned by institutional investors. Comparatively, 78.6% of Fortive shares are owned by institutional investors. 0.4% of Lam Research shares are owned by insiders. Comparatively, 12.1% of Fortive 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.

Valuation & Earnings

This table compares Lam Research and Fortive’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lam Research $8.01 billion 3.52 $1.70 billion $9.08 19.05
Fortive $6.66 billion 3.88 $1.04 billion $2.96 25.10

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Lam Research and Fortive, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lam Research 0 1 20 0 2.95
Fortive 0 6 5 0 2.45

Lam Research presently has a consensus target price of $234.20, suggesting a potential upside of 35.41%. Fortive has a consensus target price of $74.67, suggesting a potential upside of 0.49%. Given Lam Research’s stronger consensus rating and higher possible upside, research analysts clearly believe Lam Research is more favorable than Fortive.

Profitability

This table compares Lam Research and Fortive’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lam Research 17.60% 36.08% 20.19%
Fortive 15.69% 30.54% 11.16%

Dividends

Lam Research pays an annual dividend of $2.00 per share and has a dividend yield of 1.2%. Fortive pays an annual dividend of $0.28 per share and has a dividend yield of 0.4%. Lam Research pays out 22.0% of its earnings in the form of a dividend. Fortive pays out 9.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Lam Research beats Fortive on 11 of the 15 factors compared between the two stocks.

Lam Research Company Profile

Lam Research Corporation is a supplier of wafer fabrication equipment and services to the semiconductor industry. The Company designs, manufactures, markets, refurbishes and services semiconductor processing systems that are used in the fabrication of integrated circuits (ICs). It operates through manufacturing and servicing of wafer processing semiconductor manufacturing equipment segment. Its products are designed to enable its customers build a range of devices that are used in a range of electronic products, including cell phones, tablets, computers, storage devices, and networking equipment. Its customer base includes semiconductor memory, foundry, and integrated device manufacturers (IDMs) that make products, such as dynamic random-access memory (DRAM), negative-AND (NAND) memory and logic devices. It offers a portfolio of products that are used in several areas of the semiconductor manufacturing process flow, including thin film deposition, plasma etch and single-wafer clean.

Fortive Company Profile

Fortive Corporation is a diversified industrial growth company. The Company designs, develops, manufactures and markets professional and engineered products, software and services for a range of end markets. The Company operates through two segments: Professional Instrumentation and Industrial Technologies. The Company’s brands operate in field instrumentation, transportation, sensing, product realization, automation and specialty, and franchise distribution markets. The Professional Instrumentation segment offers essential products, software and services used to create actionable intelligence by measuring and monitoring a range of physical parameters in industrial applications, including electrical current, radio frequency signals, distance, pressure and temperature. The Industrial Technologies segment offers critical technical equipment, components, software and services for manufacturing, repair and transportation markets around the world.

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