Critical Contrast: Lam Research (LRCX) & 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 companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitability and earnings.

Analyst Recommendations

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This is a breakdown of current recommendations and price targets for Lam Research and Milacron, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lam Research 0 1 23 0 2.96
Milacron 0 0 2 0 3.00

Lam Research presently has a consensus target price of $245.39, suggesting a potential upside of 20.56%. Milacron has a consensus target price of $23.50, suggesting a potential upside of 19.11%. Given Lam Research’s higher possible upside, analysts plainly believe Lam Research is more favorable than Milacron.

Earnings and Valuation

This table compares Lam Research and Milacron’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lam Research $8.01 billion 4.14 $1.70 billion $9.98 20.40
Milacron $1.23 billion 1.12 $1.10 million $1.69 11.67

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.

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.

Risk & Volatility

Lam Research has a beta of 1.4, indicating that its stock price is 40% more volatile than the S&P 500. Comparatively, Milacron has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500.

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%

Institutional and Insider Ownership

90.3% of Lam Research shares are owned by institutional investors. 0.4% of Lam Research shares are owned by company insiders. Comparatively, 2.7% of Milacron shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Lam Research beats Milacron on 13 of the 16 factors compared between the two stocks.

About Lam Research

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits worldwide. The company offers thin film deposition products, including SABRE electrochemical deposition products for copper damascene manufacturing; ALTUS systems to deposit conformal atomic layer films for tungsten metallization applications; VECTOR plasma-enhanced chemical vapor deposition (CVD) and atomic layer deposition systems to deposit oxides, nitrides, and carbides for hardmasks, multiple patterning films, anti-reflective layers, multi-layer stack films, and diffusion barriers; and Striker atomic layer deposition systems that deliver conformal dielectric films for spacer-based patterning and liner applications in various advanced memory and logic structures. Its thin film deposition products also comprise SPEED high-density plasma CVD products for applications in shallow trench isolation, pre-metal dielectrics, inter-layer dielectrics, inter-metal dielectrics, and passivation layers; and SOLA ultraviolet thermal processing products for treatment of back-end-of-line (BEOL) low-k dielectric films and front-end-of-line silicon nitride strained films. In addition, the company offers plasma etch products, such as Kiyo that provide solutions for conductor etch applications; Versys metal products, which offer a platform for BEOL metal etch processes; Flex for dielectric etch applications; and Syndion to address various through-silicon via etch and complementary image sensor etch applications. Further, it provides single-wafer clean products comprising EOS, Da Vinci, DV-Prime, and SP series products for wet etch and clean applications in wafer-level packaging; and Coronus plasma-based bevel clean products to enhance die yield by removing particles, residues, and unwanted films from the wafer's edge, as well as legacy products. The company was founded in 1980 and is headquartered in Fremont, California.

About Milacron

Milacron Holdings Corp. manufactures, distributes, and services engineered and customized systems within the plastic technology and processing industry in the United States and internationally. The company operates through three segments: Advanced Plastic Processing Technologies (APPT), Melt Delivery and Control Systems (MDCS), and Fluid Technologies (Fluids). The APPT segment designs, manufactures, and sells injection molding, blow molding, and extrusion equipment; and auxiliary systems and related parts and service. This segment serves companies who serve in the consumer goods, packaging, electronics, medical, automotive, and construction end markets. The MDCS segment designs, manufactures, and sells hot runner systems, process control systems, mold bases and components, and aftermarket parts and related technologies and services for injection molding, as well as maintenance, repair, and operating supplies for plastic processing operations. This segment serves customers in the plastic processing value chain and manufacturing spectrum, including OEMs, molders, and mold makers in the consumer goods, electronics, automotive, packaging, and medical end markets. The Fluids segment manufactures and markets coolants, lubricants, process cleaners, and corrosion inhibitors that are used in metalworking processes, such as cutting, grinding, stamping, forming, and high speed machining. This segment's products are used in various markets, such as aerospace, medical, automotive, industrial components and machinery, bearings, munitions, packaging, job shops, and glass and mirror production. The company was formerly known as Milacron LLC and changed its name to Milacron Holdings Corp. in May 2012. The company was founded in 1860 and is headquartered in Cincinnati, Ohio.

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