Critical Comparison: Nitto Denko (OTCMKTS:NDEKY) vs. NVE (NASDAQ:NVEC)

NVE (NASDAQ:NVEC) and Nitto Denko (OTCMKTS:NDEKY) are both technology companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.

Volatility and Risk

NVE has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500. Comparatively, Nitto Denko has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for NVE and Nitto Denko, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NVE	0	0	1	0	3.00
Nitto Denko	0	1	0	0	2.00

Institutional & Insider Ownership

65.9% of NVE shares are held by institutional investors. 2.1% of NVE shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

NVE pays an annual dividend of $4.00 per share and has a dividend yield of 4.0%. Nitto Denko pays an annual dividend of $0.22 per share and has a dividend yield of 1.1%. NVE pays out 107.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Nitto Denko pays out 16.8% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares NVE and Nitto Denko”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NVE	$31.26 million	15.31	$15.20 million	$3.72	26.60
Nitto Denko	$6.83 billion	2.03	$881.09 million	$1.31	15.62

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

Profitability

This table compares NVE and Nitto Denko’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NVE	57.64%	30.53%	29.54%
Nitto Denko	12.94%	12.13%	9.66%

Summary

NVE beats Nitto Denko on 12 of the 15 factors compared between the two stocks.

About NVE

NVE Corporation develops and sells devices that use spintronics, a nanotechnology that relies on electron spin to acquire, store, and transmit information in the United States and internationally. The company manufactures spintronic products, including sensors and couplers for use in acquiring and transmitting data. Its products comprise standard sensors to detect the presence of a magnetic or metallic material to determine position, rotation, or speed for the factory automation market; and custom and medical sensors for medical devices to replace electromechanical magnetic switches. The company also offers spintronic couplers for power conversion and industrial Internet of Things (IIoT) market; and DC-to-DC convertors for use in power conversion systems and industrial networks for the IIoT. In addition, it undertakes contracts for research and development, and licensing of spintronic magnetoresistive random access memory technology. NVE Corporation was founded in 1989 and is headquartered in Eden Prairie, Minnesota.

About Nitto Denko

Nitto Denko Corporation primarily engages in the adhesive tapes business in Japan, the Americas, Europe, Asia, and Oceania. It provides double sided tapes, surface protective films, sealing materials, masking tapes, membranes, FPD/touch panel related products, gasket materials, semiconductor manufacturing process products, flexible printed circuit boards, porous films/breathable materials, and packaging tapes. The company also offers functional thermal transfer systems, such as labels, barcode label printers, and label printing software; tapes for electrical and electronic equipment; dust removal products for clean rooms; fluoroplastic sheets and tapes, and fluoroplastic porous films; and materials for housing and construction. In addition, it provides medical products, including transdermal therapeutic systems, athletic tapes, medical adhesive tapes for wearable devices and body sensors, adhesive tapes, and particles for nucleic acid synthesis. The company offers its products to automotive and transportation, housing/housing equipment, infrastructure, material, home appliance and electrical, display, electronic device, medical, packaging, and consumer/personal care industries. Nitto Denko Corporation was incorporated in 1918 and is headquartered in Osaka, Japan.