Semtech Corporation (NASDAQ: SMTC) and Veeco Instruments (NASDAQ:VECO) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, earnings, analyst recommendations, risk and profitability.

Institutional & Insider Ownership

95.1% of Semtech Corporation shares are owned by institutional investors. Comparatively, 96.2% of Veeco Instruments shares are owned by institutional investors. 2.2% of Semtech Corporation shares are owned by insiders. Comparatively, 2.9% of Veeco Instruments shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Semtech Corporation and Veeco Instruments’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Semtech Corporation $556.93 million 4.44 $112.89 million $0.90 41.83
Veeco Instruments $388.54 million 2.42 $4.60 million ($2.31) -8.42

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Semtech Corporation and Veeco Instruments, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Semtech Corporation 0 1 6 0 2.86
Veeco Instruments 0 2 7 0 2.78

Semtech Corporation presently has a consensus target price of $43.50, suggesting a potential upside of 15.54%. Veeco Instruments has a consensus target price of $31.13, suggesting a potential upside of 60.03%. Given Veeco Instruments’ higher probable upside, analysts plainly believe Veeco Instruments is more favorable than Semtech Corporation.

Profitability

This table compares Semtech Corporation and Veeco Instruments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Semtech Corporation 10.70% 12.16% 7.23%
Veeco Instruments -23.65% -1.33% -0.91%

Risk and Volatility

Semtech Corporation has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500. Comparatively, Veeco Instruments has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500.

Summary

Semtech Corporation beats Veeco Instruments on 9 of the 13 factors compared between the two stocks.

Semtech Corporation Company Profile

Semtech Corporation is a supplier of analog and mixed-signal semiconductor products. The Company designs, develops and markets a range of products for commercial applications, which are sold into the enterprise computing, communications, consumer and industrial end-markets. Its product lines include Signal Integrity, Protection, Wireless and Sensing, and Power and High-Reliability. Applications for the industrial market include video broadcast studio equipment, automated meter reading, wireless charging, military and aerospace, medical, security systems, automotive, Internet of Things, industrial and home automation, and video security and surveillance. Enterprise computing end-markets include desktops, notebooks, servers, graphic boards, printers, datacenter related equipment and passive optical networks. Communications end-market applications include wireless base stations, carrier networks, switches and routers, cable modems, signal conditioners and wireless local area network.

Veeco Instruments Company Profile

Veeco Instruments Inc. is engaged in the design, development, manufacture and support of thin film process equipment, primarily sold to make electronic devices. The Company’s geographical segments include the United States; China; Europe, Middle East and Africa (EMEA), and Rest of World (ROW). The Company’s portfolio of technology solutions focus on market areas, including Lighting, Display & Power Electronics; Advanced Packaging, micro-electromechanical systems (MEMS) & radio frequency (RF); Scientific & Industrial, and Data Storage. The Company’s equipment is used to make electronic devices, including light emitting diodes (LEDs), MEMS, wireless devices, power electronics, hard disk drives (HDDs) and semiconductor devices. The Company’s System products include Metal Organic Chemical Vapor Deposition Systems, Precision Surface Processing Systems, Ion Beam Etch and Deposition Systems, Molecular Beam Epitaxy Systems, and Other Deposition and Industrial Products.

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