Critical Survey: Tokyo Electron (OTCMKTS:TOELY) versus Garmin (NYSE:GRMN)

Tokyo Electron (OTCMKTS:TOELY) and Garmin (NYSE:GRMN) are both large-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Dividends

Tokyo Electron pays an annual dividend of $2.10 per share and has a dividend yield of 2.3%. Garmin pays an annual dividend of $3.60 per share and has a dividend yield of 1.7%. Tokyo Electron pays out 54.3% of its earnings in the form of a dividend. Garmin pays out 47.4% 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 increased its dividend for 8 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Tokyo Electron	22.37%	30.47%	21.77%
Garmin	22.76%	19.21%	15.58%

Insider & Institutional Ownership

1.3% of Tokyo Electron shares are owned by institutional investors. Comparatively, 81.6% of Garmin shares are owned by institutional investors. 15.4% of Garmin shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Tokyo Electron and Garmin”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tokyo Electron	$15.97 billion	5.27	$3.57 billion	$3.87	23.59
Garmin	$6.30 billion	6.60	$1.41 billion	$7.60	28.39

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

Volatility & Risk

Tokyo Electron has a beta of 1.75, suggesting that its share price is 75% more volatile than the S&P 500. Comparatively, Garmin has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Tokyo Electron and Garmin, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tokyo Electron	0	0	0	1	4.00
Garmin	2	1	0	1	2.00

Garmin has a consensus target price of $206.00, suggesting a potential downside of 4.52%. Given Garmin’s higher probable upside, analysts plainly believe Garmin is more favorable than Tokyo Electron.

Summary

Garmin beats Tokyo Electron on 9 of the 16 factors compared between the two stocks.

About Tokyo Electron

Tokyo Electron Limited, together with its subsidiaries, develops, manufactures, and sells semiconductor and flat panel display (FPD) production equipment in Japan, Europe, North America, Taiwan, China, South Korea, Southeast Asia, and internationally. The company offers coaters/developers, etch systems, surface preparation systems, deposition systems, test systems, wafer bonders/debonders, wafer edge trimming, SiC epitaxial CVD systems, gas cluster ion beam system, and cleaning systems. It also provides plasma etch/ash systems for use in the manufacture of FPDs, as well as inkjet printing systems for manufacturing OLED displays. In addition, the company offers delivery, facility management, and non-life insurance services; sells semiconductor products, board computer products, software, and other electronic components; sells and supports network/storage/middleware related solutions; and develops, manufactures, and sells magnetic annealing systems. Tokyo Electron Limited was incorporated in 1951 and is headquartered in Tokyo, Japan.

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.