Analyzing Ultratech (UTEK) and Ultra Clean (UCTT)

Ultra Clean (NASDAQ: UCTT) and Ultratech (NASDAQ:UTEK) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Risk and Volatility

Ultra Clean has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, Ultratech has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Ultra Clean and Ultratech, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ultra Clean 0 1 4 0 2.80
Ultratech 0 3 0 0 2.00

Ultra Clean currently has a consensus target price of $31.00, indicating a potential upside of 51.89%. Ultratech has a consensus target price of $28.88, indicating a potential downside of 4.47%. Given Ultra Clean’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Ultra Clean is more favorable than Ultratech.

Insider and Institutional Ownership

75.9% of Ultra Clean shares are held by institutional investors. Comparatively, 92.7% of Ultratech shares are held by institutional investors. 2.6% of Ultra Clean shares are held by insiders. Comparatively, 5.9% of Ultratech shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Ultra Clean and Ultratech’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ultra Clean 7.55% 28.77% 16.02%
Ultratech 5.17% 3.22% 2.83%

Earnings and Valuation

This table compares Ultra Clean and Ultratech’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ultra Clean $562.76 million 1.22 $10.05 million $1.88 10.86
Ultratech N/A N/A N/A $0.57 53.04

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

Summary

Ultra Clean beats Ultratech on 9 of the 11 factors compared between the two stocks.

About Ultra Clean

Ultra Clean Holdings, Inc. is engaged in the design, engineering and manufacture of production tools, modules and subsystems the semiconductor capital equipment industry. The Company’s products include precision robotic solutions; gas delivery systems; a range of industrial and automation production equipment products; subsystems that includes wafer cleaning sub-systems, chemical delivery modules, top-plate assemblies, frame assemblies, and process modules. The Company offers its products for the semiconductor capital equipment and equipment industry segments. It also sells to the consumer, medical, energy, industrial, flat panel and research equipment industries. The Company is focused on providing specialized engineering and manufacturing solutions for these applications. It provides its original equipment manufacturing (OEM) customers an outsourced solution for the development, design, component sourcing, prototyping, engineering, manufacturing and testing of various systems.

About Ultratech

Ultratech, Inc. (Ultratech) develops, manufactures and markets photolithography, laser thermal processing and inspection equipment. The Company operates through the manufacture and distribution of capital equipment to manufacturers of integrated circuits and nanotechnology components segment. The Company serves manufacturers of semiconductor devices, including packaging processes and various nanotechnology components such as laser diodes, high-brightness light emitting diodes (HBLEDs) and micro-electro-mechanical systems (MEMS), as well as atomic layer deposition systems (ALD) for customers located throughout the world. It has operations in North America, Europe, Singapore, Japan, Taiwan, Korea and the rest of Asia. The Company supplies step-and-repeat photolithography systems based on one-to-one (1X) imaging technology to customers located throughout North America, Europe and Asia.

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