Ultra Clean (NASDAQ:UCTT) and Himax Technologies (HIMX) Critical Contrast

Ultra Clean (NASDAQ:UCTT) and Himax Technologies (NASDAQ:HIMX) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Insider & Institutional Ownership

94.7% of Ultra Clean shares are held by institutional investors. Comparatively, 13.1% of Himax Technologies shares are held by institutional investors. 1.9% of Ultra Clean shares are held by insiders. Comparatively, 31.5% of Himax Technologies shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Ultra Clean and Himax Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ultra Clean 1.20% 11.20% 5.57%
Himax Technologies 1.25% 2.36% 1.27%

Earnings and Valuation

This table compares Ultra Clean and Himax Technologies’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ultra Clean $1.10 billion 0.48 $36.60 million $1.66 8.05
Himax Technologies $723.60 million 0.79 $8.57 million $0.06 55.50

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

Dividends

Himax Technologies pays an annual dividend of $0.09 per share and has a dividend yield of 2.7%. Ultra Clean does not pay a dividend. Himax Technologies pays out 150.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

Ultra Clean has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500. Comparatively, Himax Technologies has a beta of 0.04, suggesting that its stock price is 96% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Ultra Clean and Himax Technologies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ultra Clean 0 0 6 0 3.00
Himax Technologies 0 6 1 0 2.14

Ultra Clean presently has a consensus target price of $19.70, indicating a potential upside of 47.46%. Himax Technologies has a consensus target price of $5.43, indicating a potential upside of 63.02%. Given Himax Technologies’ higher possible upside, analysts clearly believe Himax Technologies is more favorable than Ultra Clean.

Summary

Ultra Clean beats Himax Technologies on 10 of the 16 factors compared between the two stocks.

About Ultra Clean

Ultra Clean Holdings, Inc. designs, develops, prototypes, engineers, manufactures, and tests production tools, modules, and subsystems for the semiconductor and display capital equipment industries primarily in North America, Asia, and Europe. It offers precision robotic systems that are used when accurate controlled motion is required; gas delivery systems, which include one or more gas lines consisting of small diameter internally polished stainless steel tubing products, filters, mass flow controllers, regulators, pressure transducers and valves, component heaters, and an integrated electronic and/or pneumatic control system; and various industrial and automation production equipment products. The company also provides subsystems, such as wafer cleaning modules; chemical delivery modules that deliver gases and reactive chemicals in a liquid or gaseous form from a centralized subsystem to the reaction chamber; frame assemblies, which are support structures fabricated from steel tubing or folded sheet metal; and top-plate assemblies. In addition, it offers fluid delivery systems consists of one or more chemical delivery units; process modules, which are the subsystems of semiconductor manufacturing tools that process integrated circuits onto wafers; and other high level assemblies. The company primarily serves original equipment manufacturing customers in the semiconductor capital equipment, consumer, medical, energy, industrial, and research industries. Ultra Clean Holding, Inc. was founded in 1991 and is headquartered in Hayward, California.

About Himax Technologies

Himax Technologies, Inc., a fabless semiconductor company, provides display imaging processing technologies worldwide. The company operates in two segments, Driver IC and Non-Driver Products. It offers display driver integrated circuits (ICs) and timing controllers used in televisions (TVs), laptops, monitors, mobile phones, tablets, digital cameras, car navigation, and other consumer electronics devices. The company also designs and provides controllers for touch sensor displays; in-cell touch and display driver integration single-chip solutions; LED driver and power management ICs; scaler products for monitors and projectors; tailor-made video processing IC solutions; silicon IPs; and liquid crystal on silicon micro-displays for augmented reality (AR) devices and head-up displays for automotive industry. In addition, it offers digital camera solutions, including complementary metal oxide semiconductor image sensors and wafer level optics for AR devices, 3D sensing, and machine vision, which are used in various applications, such as mobile phone, tablet, laptop, TV, PC camera, automobile, security, medical devices, and Internet on Things. The company markets its display drivers and display-related products to panel manufacturers, agents or distributors, module manufacturers, and assembly houses; and non-driver products to camera module manufacturers, optical engine manufacturers, and television system manufacturers. Himax Technologies, Inc. has a collaboration with Kneron to develop and commercialize a 3D sensing and AI-enabled security and surveillance solution. The company was founded in 2001 and is headquartered in Tainan City, Taiwan.

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