Analyzing Viavi Solutions (VIAV) and Ultra Clean (UCTT)

Viavi Solutions (NASDAQ: VIAV) and Ultra Clean (NASDAQ:UCTT) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Viavi Solutions 3.94% 9.60% 3.62%
Ultra Clean 8.12% 29.62% 16.22%

Valuation & Earnings

This table compares Viavi Solutions and Ultra Clean’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Viavi Solutions $811.40 million 2.81 $166.90 million $0.25 40.40
Ultra Clean $924.35 million 0.70 $75.08 million $2.34 7.15

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

Risk and Volatility

Viavi Solutions has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, Ultra Clean has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.

Insider & Institutional Ownership

93.5% of Viavi Solutions shares are held by institutional investors. Comparatively, 69.3% of Ultra Clean shares are held by institutional investors. 0.6% of Viavi Solutions shares are held by company insiders. Comparatively, 2.6% of Ultra Clean shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Viavi Solutions and Ultra Clean, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Viavi Solutions 0 2 6 0 2.75
Ultra Clean 0 1 4 0 2.80

Viavi Solutions currently has a consensus price target of $11.93, suggesting a potential upside of 18.10%. Ultra Clean has a consensus price target of $31.60, suggesting a potential upside of 88.77%. Given Ultra Clean’s stronger consensus rating and higher possible upside, analysts plainly believe Ultra Clean is more favorable than Viavi Solutions.

Summary

Ultra Clean beats Viavi Solutions on 8 of the 14 factors compared between the two stocks.

Viavi Solutions Company Profile

Viavi Solutions Inc. provides network test, monitoring, and assurance solutions to communications service providers, and enterprises and their ecosystems worldwide. The company operates through Network Enablement, Service Enablement, and Optical Security and Performance Products segments. The Network Enablement segment offers testing solutions that access the network to perform build-out and maintenance tasks. This segment provides solutions that include instruments, software and services to design, build, activate, certify, troubleshoot, and optimize networks. It also offers support and professional services, such as repair, calibration, software support, and technical assistance for the products; and system integration projects comprising project management, installation, and implementation, as well as product and technology training, and consulting services. The Service Enablement segment provides embedded systems and enterprise performance management solutions for communication service providers and enterprises with visibility into network, service, and application data. Its solutions comprise instruments, microprobes, and software, which monitor, collect, and analyze network data to reveal the actual customer experience and to identify opportunities for new revenue streams and network optimization. The Optical Security and Performance Products segment offers optical products for anti-counterfeiting, government, industrial, automotive, and consumer electronic markets, including 3D sensing applications. The company was formerly known as JDS Uniphase Corporation and changed its name to Viavi Solutions Inc. in August 2015. Viavi Solutions Inc. was founded in 1979 and is headquartered in Milpitas, California.

Ultra Clean Company Profile

Ultra Clean Holdings, Inc. designs, develops, prototypes, engineers, manufactures, and tests production tools, modules, and subsystems for the semiconductor and display capital equipment industries primarily in North America, Asia, and Europe. It offers precision robotic systems that are used when accurate controlled motion is required; gas delivery systems, which include one or more gas lines consisting of small diameter internally polished stainless steel tubing products, filters, mass flow controllers, regulators, pressure transducers and valves, component heaters, and an integrated electronic and/or pneumatic control system; and various industrial and automation production equipment products. The company also provides subsystems, such as wafer cleaning modules; chemical delivery modules that deliver gases and reactive chemicals in a liquid or gaseous form from a centralized subsystem to the reaction chamber; frame assemblies, which are support structures fabricated from steel tubing or folded sheet metal; and top-plate assemblies. In addition, it offers fluid delivery systems consists of one or more chemical delivery units; process modules, which are the subsystems of semiconductor manufacturing tools that process integrated circuits onto wafers; and other high level assemblies. The company primarily serves original equipment manufacturing customers in the semiconductor capital equipment, consumer, medical, energy, industrial, and research industries. Ultra Clean Holding, Inc. was founded in 1991 and is headquartered in Hayward, California.

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