Critical Survey: Garmin (NYSE:GRMN) vs. MKS (NASDAQ:MKSI)

Garmin (NYSE:GRMN) and MKS (NASDAQ:MKSI) are both large-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, valuation, risk, earnings, analyst recommendations, dividends and institutional ownership.

Dividends

Garmin pays an annual dividend of $3.60 per share and has a dividend yield of 1.5%. MKS pays an annual dividend of $1.00 per share and has a dividend yield of 0.3%. Garmin pays out 40.1% of its earnings in the form of a dividend. MKS pays out 22.9% 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. Garmin has raised its dividend for 8 consecutive years. Garmin is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Garmin has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, MKS has a beta of 1.98, meaning that its share price is 98% more volatile than the S&P 500.

Earnings and Valuation

This table compares Garmin and MKS”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Garmin	$7.25 billion	6.39	$1.66 billion	$8.97	26.77
MKS	$3.93 billion	5.36	$295.00 million	$4.37	71.67

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

Insider & Institutional Ownership

81.6% of Garmin shares are held by institutional investors. Comparatively, 99.8% of MKS shares are held by institutional investors. 15.4% of Garmin shares are held by company insiders. Comparatively, 0.6% of MKS shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Garmin and MKS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Garmin	23.26%	20.07%	16.34%
MKS	8.06%	21.49%	6.54%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Garmin and MKS, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Garmin	0	4	2	1	2.57
MKS	1	2	11	1	2.80

Garmin currently has a consensus target price of $268.40, indicating a potential upside of 11.78%. MKS has a consensus target price of $317.23, indicating a potential upside of 1.28%. Given Garmin’s higher possible upside, research analysts clearly believe Garmin is more favorable than MKS.

Summary

Garmin beats MKS on 10 of the 17 factors compared between the two stocks.

About Garmin

Garmin Ltd. designs, develops, manufactures, markets, and distributes a range of wireless devices worldwide. Its Fitness segment offers running and multi-sport watches; cycling products; smartwatch devices; scales and monitors; and fitness accessories. This segment also provides Garmin Connect and Garmin Connect Mobile, which are web and mobile platforms where users can track and analyze their fitness, activities and workouts, and wellness data; and Connect IQ, an application development platform. The company's Outdoor segment offers adventure watches, outdoor handhelds and satellite communicators, golf devices, consumer automotive devices, and dog devices, as well as InReach and Gramin response communication device. Its Aviation segment designs, manufactures, and markets various aircraft avionics solutions, including integrated flight decks, electronic flight displays and instrumentation, navigation and communication products, automatic flight control systems and safety-enhancing technologies, audio control systems, engine indication systems, traffic awareness and avoidance solutions, ADS-B and transponders, weather information and avoidance solutions, datalink and connectivity solutions, and various services. The company's Marine segment provides chartplotters and multi-function displays, cartography products, fishfinders, sonar products, autopilot systems, radars, compliant instrument displays and sensors, VHF communication radios, handhelds and wearable devices, sailing products, audio products and accessories, digital switching products, and trolling motors. Its Auto segment offers embedded domain controllers and infotainment units; and software, map database, cameras, wearables, and automotive solutions. The company sells its products through independent retailers, dealers, distributors, installation and repair shops, and original equipment manufacturers, as well as online webshop. Garmin Ltd. was founded in 1989 and is based in Schaffhausen, Switzerland.

About MKS

MKS Instruments, Inc. provides foundational technology solutions to semiconductor manufacturing, electronics and packaging, and specialty industrial applications in the United States, Germany, China, South Korea, and internationally. It operates through Vacuum Solutions Division (VSD), Photonics Solutions Division (PSD), and Material Solutions Division (MSD) segments. The VSD segment provides foundational technology solutions, including pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, electronic control technology, reactive gas generation and delivery, power generation and delivery, and vacuum technology. The PSD segment offers range of solutions, which include lasers, beam measurement and profiling, precision motion control, vibration isolation systems, photonics instruments, temperature sensing, opto-mechanical components, optical elements, systems for flexible PCB laser processing, and laser-based systems, as well as high density interconnect PCB and package manufacturing. The MSD segment develops, process, and manufactures technologies comprising advanced surface modification, electroless and electrolytic plating, and surface finishing for chemistry, equipment, software, and services markets, as well as high-technology applications. In addition, the company sells its products and services through direct sales, network of independent distributors, and sales representatives, as well as websites, including product catalogs. The company was incorporated in 1961 and is headquartered in Andover, Massachusetts.