Analyzing Applied Materials (AMAT) & EMCORE (EMKR)

Applied Materials (NASDAQ: AMAT) and EMCORE (NASDAQ:EMKR) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.

Volatility & Risk

Applied Materials has a beta of 1.65, indicating that its share price is 65% more volatile than the S&P 500. Comparatively, EMCORE has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500.

Institutional & Insider Ownership

78.5% of Applied Materials shares are held by institutional investors. Comparatively, 78.1% of EMCORE shares are held by institutional investors. 0.4% of Applied Materials shares are held by company insiders. Comparatively, 2.0% of EMCORE shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Applied Materials and EMCORE’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Applied Materials 18.53% 45.17% 20.57%
EMCORE 1.44% 1.72% 1.46%

Dividends

Applied Materials pays an annual dividend of $0.40 per share and has a dividend yield of 0.7%. EMCORE does not pay a dividend. Applied Materials pays out 12.3% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current recommendations and price targets for Applied Materials and EMCORE, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Materials 0 2 20 1 2.96
EMCORE 0 0 3 0 3.00

Applied Materials presently has a consensus target price of $65.57, suggesting a potential upside of 19.08%. EMCORE has a consensus target price of $6.33, suggesting a potential upside of 34.75%. Given EMCORE’s stronger consensus rating and higher possible upside, analysts clearly believe EMCORE is more favorable than Applied Materials.

Earnings & Valuation

This table compares Applied Materials and EMCORE’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Applied Materials $14.54 billion 3.98 $3.43 billion $3.25 16.94
EMCORE $122.89 million 1.05 $8.23 million $0.39 12.05

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

Summary

Applied Materials beats EMCORE on 13 of the 17 factors compared between the two stocks.

About Applied Materials

Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, display, and related industries worldwide. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits. It offers products and technologies for transistor and interconnect fabrication, including epitaxy, ion implantation, oxidation and nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays, organic light-emitting diodes, and other display technologies for TVs, personal computers, electronic tablets, smart phones, and other consumer-oriented devices, as well as equipment for flexible substrates. The company serves manufacturers of semiconductor wafers and chips, liquid crystal and organic light-emitting diode displays, and other electronic devices. Applied Materials, Inc. was founded in 1967 and is headquartered in Santa Clara, California.

About EMCORE

EMCORE Corporation, together with its subsidiaries, provides advanced mixed-signal optics products in California. It offers broadband products comprising cable television; laser, receiver, and photodetector component products; radio frequency over glass FTTP products; satellite/microwave communications products; and wireless communications products. The company also provides chip devices products, including high-power gain chips, GPON fiber-to-the-premises, and data center chip products; and navigation systems products, such as fiber optic gyroscope products and inertial measurement units and navigation systems products. It sells its products through direct sales force, application engineers, third party sales representatives, and distributors. EMCORE Corporation was founded in 1984 and is headquartered in Alhambra, California.

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