Reviewing GlobalFoundries (NASDAQ:GFS) & Lam Research (NASDAQ:LRCX)

Lam Research (NASDAQ:LRCX) and GlobalFoundries (NASDAQ:GFS) are both large-cap technology companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, dividends, earnings and valuation.

Insider and Institutional Ownership

84.6% of Lam Research shares are owned by institutional investors. 0.3% of Lam Research shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Lam Research has a beta of 1.85, indicating that its share price is 85% more volatile than the S&P 500. Comparatively, GlobalFoundries has a beta of 1.78, indicating that its share price is 78% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Lam Research and GlobalFoundries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lam Research	0	5	26	1	2.88
GlobalFoundries	2	9	9	0	2.35

Lam Research presently has a consensus price target of $358.97, suggesting a potential upside of 16.68%. GlobalFoundries has a consensus price target of $74.32, suggesting a potential upside of 64.38%. Given GlobalFoundries’ higher probable upside, analysts plainly believe GlobalFoundries is more favorable than Lam Research.

Profitability

This table compares Lam Research and GlobalFoundries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lam Research	31.27%	67.60%	33.48%
GlobalFoundries	10.36%	6.69%	4.69%

Dividends

Lam Research pays an annual dividend of $1.04 per share and has a dividend yield of 0.3%. GlobalFoundries pays an annual dividend of $0.48 per share and has a dividend yield of 1.1%. Lam Research pays out 18.1% of its earnings in the form of a dividend. GlobalFoundries pays out 37.5% 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. Lam Research has raised its dividend for 10 consecutive years.

Valuation and Earnings

This table compares Lam Research and GlobalFoundries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lam Research	$23.23 billion	16.57	$7.27 billion	$5.76	53.41
GlobalFoundries	$6.79 billion	3.65	$885.00 million	$1.28	35.32

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

Summary

Lam Research beats GlobalFoundries on 16 of the 18 factors compared between the two stocks.

About Lam Research

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers ALTUS systems to deposit conformal films for tungsten metallization applications; SABRE electrochemical deposition products for copper interconnect transition that offers copper damascene manufacturing; SOLA ultraviolet thermal processing products for film treatments; and VECTOR plasma-enhanced CVD ALD products. It also provides SPEED gapfill high-density plasma chemical vapor deposition products; and Striker single-wafer atomic layer deposition products for dielectric film solutions. In addition, the company offers Flex for dielectric etch applications; Kiyo for conductor etch applications; Syndion for through-silicon via etch applications; and Versys metal products for metal etch processes. Further, it provides Coronus bevel clean products to enhance die yield; Da Vinci, DV-Prime, EOS, and SP series products to address various wafer cleaning applications; and Metryx mass metrology systems for high precision in-line mass measurement in semiconductor wafer manufacturing. The company sells its products and services to semiconductors industry in the United States, China, Europe, Japan, Korea, Southeast Asia, Taiwan, and internationally. The company was incorporated in 1980 and is headquartered in Fremont, California.

About GlobalFoundries

GlobalFoundries Inc., a semiconductor foundry, provides range of mainstream wafer fabrication services and technologies worldwide. It manufactures various semiconductor devices, including microprocessors, mobile application processors, baseband processors, network processors, radio frequency modems, microcontrollers, and power management units. GlobalFoundries Inc. has a strategic partnership with Efficient Computer to develop high-performance computer processors. The company was incorporated in 2008 and is headquartered in Malta, New York.