Cabot Microelectronics Corporation (NASDAQ: CCMP) and Coherent (NASDAQ:COHR) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, profitabiliy, analyst recommendations, institutional ownership and dividends.

Profitability

This table compares Cabot Microelectronics Corporation and Coherent’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cabot Microelectronics Corporation 16.41% 16.08% 11.31%
Coherent 11.08% 24.98% 12.59%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Cabot Microelectronics Corporation and Coherent, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cabot Microelectronics Corporation 0 1 2 0 2.67
Coherent 0 0 6 0 3.00

Cabot Microelectronics Corporation presently has a consensus target price of $80.00, suggesting a potential upside of 11.87%. Coherent has a consensus target price of $263.33, suggesting a potential upside of 24.81%. Given Coherent’s stronger consensus rating and higher possible upside, analysts plainly believe Coherent is more favorable than Cabot Microelectronics Corporation.

Valuation and Earnings

This table compares Cabot Microelectronics Corporation and Coherent’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cabot Microelectronics Corporation $493.08 million 3.66 $132.47 million $3.19 22.42
Coherent $1.48 billion 3.51 $369.20 million $6.63 31.82

Coherent has higher revenue and earnings than Cabot Microelectronics Corporation. Cabot Microelectronics Corporation is trading at a lower price-to-earnings ratio than Coherent, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

94.3% of Cabot Microelectronics Corporation shares are held by institutional investors. Comparatively, 92.5% of Coherent shares are held by institutional investors. 5.5% of Cabot Microelectronics Corporation shares are held by company insiders. Comparatively, 1.4% of Coherent shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Cabot Microelectronics Corporation has a beta of 1.48, suggesting that its stock price is 48% more volatile than the S&P 500. Comparatively, Coherent has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500.

Dividends

Cabot Microelectronics Corporation pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. Coherent does not pay a dividend. Cabot Microelectronics Corporation pays out 25.1% of its earnings in the form of a dividend.

Summary

Coherent beats Cabot Microelectronics Corporation on 10 of the 16 factors compared between the two stocks.

Cabot Microelectronics Corporation Company Profile

Cabot Microelectronics Corporation supplies polishing slurries and pads used in the manufacture of integrated circuit (IC) devices within the semiconductor industry, in a process called chemical mechanical planarization (CMP). The Company is engaged in the development, manufacture and sale of CMP consumables. The Company develops, produces and sells CMP slurries for polishing conducting and insulating materials used in IC devices, and also for polishing the disk substrates and magnetic heads used in hard disk drives. It also develops, manufactures and sells CMP polishing pads, which are used in conjunction with slurries in the CMP process. The Company also pursues other surface modification applications through its engineered surface finishes (ESF) business. The Company offers CMP polishing pads, under the Epic and NexPlanar brand names, for a range of applications and technology nodes.

Coherent Company Profile

Coherent, Inc. is a photonics manufacturer. The Company is engaged in designing, manufacturing, servicing and marketing of lasers and related accessories for a range of scientific, commercial and industrial applications. It operates through two segments: Specialty Lasers and Systems (SLS) and Commercial Lasers and Components (CLC). SLS develops and manufactures configurable products serving the microelectronics, scientific research and government programs, and original equipment manufacturer (OEM) components and instrumentation markets. The Commercial Lasers and Components segment focuses on higher volume products that are offered in set configurations. The product architectures are designed for exchange at the point of use such that substantially all product service and repairs are based upon advanced replacement and depot (that is factory) repair. CLC’s primary markets include materials processing, OEM components, and instrumentation and microelectronics.

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