Amtech Systems (NASDAQ: ASYS) and MSC Industrial Direct (NYSE:MSM) are both computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, analyst recommendations and risk.

Institutional and Insider Ownership

53.0% of Amtech Systems shares are owned by institutional investors. Comparatively, 78.0% of MSC Industrial Direct shares are owned by institutional investors. 34.6% of Amtech Systems shares are owned by insiders. Comparatively, 31.3% of MSC Industrial Direct shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Amtech Systems and MSC Industrial Direct, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Amtech Systems 0 0 3 0 3.00
MSC Industrial Direct 1 10 4 0 2.20

Amtech Systems presently has a consensus target price of $12.50, indicating a potential upside of 22.07%. MSC Industrial Direct has a consensus target price of $90.17, indicating a potential upside of 34.22%. Given MSC Industrial Direct’s higher possible upside, analysts clearly believe MSC Industrial Direct is more favorable than Amtech Systems.

Dividends

MSC Industrial Direct pays an annual dividend of $1.80 per share and has a dividend yield of 2.7%. Amtech Systems does not pay a dividend. MSC Industrial Direct pays out 45.1% of its earnings in the form of a dividend. MSC Industrial Direct has raised its dividend for 6 consecutive years.

Volatility & Risk

Amtech Systems has a beta of 2.05, suggesting that its share price is 105% more volatile than the S&P 500. Comparatively, MSC Industrial Direct has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500.

Earnings and Valuation

This table compares Amtech Systems and MSC Industrial Direct’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Amtech Systems $152.25 million 0.90 $4.90 million $0.12 85.33
MSC Industrial Direct $2.88 billion 1.05 $443.59 million $3.99 16.84

MSC Industrial Direct has higher revenue and earnings than Amtech Systems. MSC Industrial Direct is trading at a lower price-to-earnings ratio than Amtech Systems, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Amtech Systems and MSC Industrial Direct’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Amtech Systems 1.00% 2.34% 1.18%
MSC Industrial Direct 8.07% 20.05% 11.38%

Summary

MSC Industrial Direct beats Amtech Systems on 12 of the 17 factors compared between the two stocks.

About Amtech Systems

Amtech Systems, Inc. is engaged in the manufacture of capital equipment, including thermal processing, silicon wafer handling automation and related consumables used in fabricating solar cells, Light Emitting Diode (LED) and semiconductor devices. The Company operates through three business segments: solar, semiconductor and polishing. The solar segment supplies thermal processing systems, including diffusion; plasma-enhanced chemical vapor deposition (PECVD); atomic layer deposition (ALD), and related automation, parts and services to the solar/photovoltaic industry. The semiconductor segment supplies thermal processing equipment, including solder reflow equipment and related controls for use by the semiconductor manufacturers and in electronics assembly for automotive and other industries. The polishing supplies segment produces consumables and machinery for lapping (fine abrading) and polishing of materials, such as sapphire substrates and optical components.

About MSC Industrial Direct

MSC Industrial Direct Co., Inc. is a North American distributor of metalworking and maintenance, repair and operations (MRO) products and services. The Company’s range of MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components and electrical supplies. The Company serves a range of customers throughout the United States, Canada and the United Kingdom, from individual machine shops, to manufacturing companies, to government agencies, such as the General Services Administration and the Department of Defense. The Company also serves durable and non-durable goods manufacturing, education and healthcare markets, among others. As of September 3, 2016, the Company had operated a network of 12 customer fulfillment centers.

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