Critical Review: KLA (NASDAQ:KLAC) and Bel Fuse (NASDAQ:BELFA)

KLA (NASDAQ:KLAC) and Bel Fuse (NASDAQ:BELFA) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, earnings, valuation and analyst recommendations.

Valuation and Earnings

This table compares KLA and Bel Fuse”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KLA	$12.16 billion	18.61	$4.06 billion	$35.33	48.86
Bel Fuse	$675.46 million	4.80	$61.54 million	$4.15	61.72

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

Insider and Institutional Ownership

86.7% of KLA shares are held by institutional investors. Comparatively, 6.0% of Bel Fuse shares are held by institutional investors. 91.5% of KLA shares are held by company insiders. Comparatively, 4.8% of Bel Fuse shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for KLA and Bel Fuse, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KLA	0	10	20	0	2.67
Bel Fuse	0	1	0	1	3.00

KLA currently has a consensus target price of $1,798.30, indicating a potential upside of 4.17%. Bel Fuse has a consensus target price of $250.00, indicating a potential downside of 2.39%. Given KLA’s higher probable upside, equities analysts plainly believe KLA is more favorable than Bel Fuse.

Volatility & Risk

KLA has a beta of 1.5, indicating that its stock price is 50% more volatile than the S&P 500. Comparatively, Bel Fuse has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500.

Profitability

This table compares KLA and Bel Fuse’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KLA	35.66%	91.89%	29.21%
Bel Fuse	7.84%	22.38%	10.02%

Dividends

KLA pays an annual dividend of $7.60 per share and has a dividend yield of 0.4%. Bel Fuse pays an annual dividend of $0.24 per share and has a dividend yield of 0.1%. KLA pays out 21.5% of its earnings in the form of a dividend. Bel Fuse pays out 5.8% 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. KLA has raised its dividend for 16 consecutive years and Bel Fuse has raised its dividend for 1 consecutive years. KLA is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

KLA beats Bel Fuse on 14 of the 18 factors compared between the two stocks.

About KLA

KLA Corporation, together with its subsidiaries, engages in the design, manufacture, and marketing of process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide. It operates through three segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection. The company offers inspection and review tools to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and unpatterned wafers; metrology systems that are used to measure pattern dimensions, film thickness, film stress, layer-to-layer alignment, pattern placement, surface topography, and electro-optical properties for wafers; chemical process control equipment; wired and wireless sensor wafers and reticles; wafer defect inspection, review, and metrology systems; reticle inspection and metrology systems; and semiconductor software solutions that provide run-time process control, defect excursion identification, process corrections, and defect classification to accelerate yield learning rates and reduce production risk. It also provides etch, plasma dicing, deposition, and other wafer processing technologies and solutions for the semiconductor and microelectronics industry. In addition, the company offers direct imaging, inspection, optical shaping, inkjet and additive printing, UV laser drilling, and computer-aided manufacturing and engineering solutions for the PCB market; inspection and electrical testing systems to identify and classify defects, as well as systems to repair defects for the display market; and inspection and metrology systems for quality control and yield improvement in advanced and traditional semiconductor packaging markets. The company was formerly known as KLA-Tencor Corporation and changed its name to KLA Corporation in July 2019. KLA Corporation was incorporated in 1975 and is headquartered in Milpitas, California.

About Bel Fuse

Bel Fuse Inc. designs, manufactures, markets, and sells products that power, protect, and connect electronic circuits. The company's products are used in the networking, telecommunications, computing, general industrial, high-speed data transmission, military, commercial aerospace, transportation, and e-Mobility industries. It provides power solutions and protection products, including front-end power supplies, board-mount power products, industrial and transportation power products, external power products, and circuit protection products. The company also offers connectivity solutions, such as expanded beam fiber optic connectors, cable assemblies, and active optical devices; copper-based connectors/cable assemblies; radio frequency connectors, cable assemblies, microwave devices, and low loss cables; and ethernet, I/O, and industrial and power connectivity products. In addition, it provides magnetic solutions comprising integrated connector modules, power transformers, SMD power inductors and SMPS transformers, and ethernet discrete components. The company sells its products through direct strategic account managers, regional sales managers working with independent sales representative organizations, and authorized distributors in the United States, the People's Republic of China, Macao, the United Kingdom, Slovakia, Germany, India, Switzerland, and internationally. Bel Fuse Inc. was incorporated in 1949 and is headquartered in West Orange, New Jersey.