Head-To-Head Contrast: Timken (NYSE:TKR) & Teradyne (NASDAQ:TER)

Timken (NYSE:TKR) and Teradyne (NASDAQ:TER) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Earnings & Valuation

This table compares Timken and Teradyne”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Timken	$4.54 billion	1.20	$352.70 million	$4.23	18.54
Teradyne	$2.86 billion	10.44	$542.37 million	$2.75	68.21

Teradyne has lower revenue, but higher earnings than Timken. Timken is trading at a lower price-to-earnings ratio than Teradyne, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Timken has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500. Comparatively, Teradyne has a beta of 1.82, indicating that its share price is 82% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Timken and Teradyne, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Timken	0	8	4	0	2.33
Teradyne	1	5	11	2	2.74

Timken presently has a consensus target price of $82.91, suggesting a potential upside of 5.70%. Teradyne has a consensus target price of $164.06, suggesting a potential downside of 12.54%. Given Timken’s higher probable upside, research analysts clearly believe Timken is more favorable than Teradyne.

Profitability

This table compares Timken and Teradyne’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Timken	6.54%	11.88%	5.65%
Teradyne	15.49%	18.04%	13.31%

Dividends

Timken pays an annual dividend of $1.40 per share and has a dividend yield of 1.8%. Teradyne pays an annual dividend of $0.48 per share and has a dividend yield of 0.3%. Timken pays out 33.1% of its earnings in the form of a dividend. Teradyne pays out 17.5% 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. Timken has increased its dividend for 12 consecutive years and Teradyne has increased its dividend for 1 consecutive years. Timken is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

89.1% of Timken shares are held by institutional investors. Comparatively, 99.8% of Teradyne shares are held by institutional investors. 8.7% of Timken shares are held by insiders. Comparatively, 0.2% of Teradyne shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Teradyne beats Timken on 12 of the 18 factors compared between the two stocks.

About Timken

The Timken Company designs, manufactures, and sells engineered bearings and industrial motion products, and related services in the United States and internationally. The company's Engineered Bearings segment provides various bearing products, including tapered, spherical, and cylindrical roller bearings; plain bearings, metal-polymer bearings, and rod end bearings; radial, angular, and precision ball bearings; thrust and specialty ball bearings; journal bearings; and housed or mounted bearings. This segment serves wind energy, agriculture, construction, food and beverage, metals and mining, automotive and truck, aerospace, rail, and other industries under the Timken, GGB, and Fafnir brands. Its Industrial Motion segment offers a portfolio of engineered products comprising industrial drives, automatic lubrication systems, linear motion products and systems, chains, belts, seals, couplings, filtration systems, and industrial clutches and brakes. It also provides industrial drivetrain and bearing repairing services. This segment serves a range of industries, such as solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical, and others under the Philadelphia Gear, Cone Drive, Rollon, Nadella, Groeneveld, BEKA, Diamond, Drives, Timken Belts, Spinea, Des-Case, Lagersmit, Lovejoy, and PT Tech brands. The Timken Company was founded in 1899 and is headquartered in North Canton, Ohio.

About Teradyne

Teradyne, Inc. designs, develops, manufactures, and sells automated test systems and robotics products worldwide. It operates through four segments; Semiconductor Test, System Test, Robotics, and Wireless Test. The Semiconductor Test segment offers products and services for wafer level and device package testing of semiconductor devices in automotive, industrial, communications, consumer, smartphones, cloud, computer and electronic game, and other applications. This segment also provides FLEX test platform systems; J750 test system to address the volume semiconductor devices, including microcontrollers; Magnum platform that tests memory devices, such as flash memory and DRAM; and ETS platform for semiconductor manufacturers, and assembly and test subcontractors in the analog/mixed signal markets. It serves integrated device manufacturers that integrate the fabrication of silicon wafers into their business; fabless companies that outsource the manufacturing of silicon wafers; foundries; and semiconductor assembly and test providers. The System Test segment offers defense/aerospace test instrumentation and systems; storage and system level test systems; and circuit-board test and inspection systems. The Wireless Test segment provides wireless test solutions for silicon validation, wireless module manufacturing, and wireless end device manufacturing under the LitePoint brand. This segment also offers IQxel-MX and IQxel-MW7G series products for edge measurement performance in the manufacturing of connectivity products; IQxstream-5G and IQgig-5G family products to support 4G and 5G technologies; and IQgig-UWB+ for certification and manufacturing test support for ultra wideband products. The Robotics segment provides collaborative robotic arms, autonomous mobile robots, and advanced robotic control software for manufacturing, logistics, and industrial customers. The company was incorporated in 1960 and is headquartered in North Reading, Massachusetts.