Head to Head Review: Lam Research (LRCX) versus Milacron (MCRN)

Lam Research (NASDAQ: LRCX) and Milacron (NYSE:MCRN) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.

Insider and Institutional Ownership

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90.0% of Lam Research shares are held by institutional investors. 0.4% of Lam Research shares are held by company insiders. Comparatively, 2.7% of Milacron shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Lam Research and Milacron’s top-line 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 3.88 $1.70 billion $9.98 19.10
Milacron $1.23 billion 1.10 $1.10 million $1.69 11.47

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

Risk and Volatility

Lam Research has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500. Comparatively, Milacron has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500.

Dividends

Lam Research pays an annual dividend of $2.00 per share and has a dividend yield of 1.0%. Milacron does not pay a dividend. Lam Research pays out 20.0% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent recommendations for Lam Research and Milacron, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lam Research 0 0 23 0 3.00
Milacron 0 0 2 0 3.00

Lam Research presently has a consensus price target of $246.55, suggesting a potential upside of 29.32%. Milacron has a consensus price target of $23.50, suggesting a potential upside of 21.20%. Given Lam Research’s higher possible upside, equities analysts plainly believe Lam Research is more favorable than Milacron.

Profitability

This table compares Lam Research and Milacron’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%
Milacron 0.09% -62.36% 6.65%

Summary

Lam Research beats Milacron on 13 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.

Milacron Company Profile

Milacron Holdings Corp. is engaged in the manufacture, distribution, and service of engineered and customized systems used in the plastic technology and processing industry. The Company operates through three segments: Advanced Plastic Processing Technologies (APPT), Melt Delivery and Control Systems (MDCS), and Fluid Technologies. The Company has a product portfolio that includes hot runner systems, injection molding, blow molding and extrusion equipment. It produces process control systems, mold bases and components, and maintenance, repair and operating (MRO) supplies and fluid technology. As of December 31, 2016, the Company’s products were sold in over 100 countries across six continents. Its customers include original equipment manufacturers (OEMs), molders and mold-makers. Its customer base covers a range of end-market applications, including packaging, automotive, medical, construction, consumer goods and electronics.

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