Head-To-Head Analysis: Amkor Technology (NASDAQ:AMKR) and Applied Materials (NASDAQ:AMAT)

Applied Materials (NASDAQ:AMAT) and Amkor Technology (NASDAQ:AMKR) are both large-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, institutional ownership, risk, dividends, analyst recommendations and profitability.

Analyst Ratings

This is a breakdown of current recommendations for Applied Materials and Amkor Technology, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Materials	0	7	26	1	2.82
Amkor Technology	0	8	3	0	2.27

Applied Materials presently has a consensus target price of $363.46, indicating a potential upside of 7.80%. Amkor Technology has a consensus target price of $49.86, indicating a potential upside of 12.16%. Given Amkor Technology’s higher probable upside, analysts plainly believe Amkor Technology is more favorable than Applied Materials.

Valuation & Earnings

This table compares Applied Materials and Amkor Technology”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Materials	$28.37 billion	9.43	$7.00 billion	$9.77	34.51
Amkor Technology	$6.71 billion	1.64	$373.89 million	$1.51	29.44

Applied Materials has higher revenue and earnings than Amkor Technology. Amkor Technology is trading at a lower price-to-earnings ratio than Applied Materials, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Applied Materials has a beta of 1.65, indicating that its share price is 65% more volatile than the S&P 500. Comparatively, Amkor Technology has a beta of 1.94, indicating that its share price is 94% more volatile than the S&P 500.

Profitability

This table compares Applied Materials and Amkor Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Applied Materials	27.78%	37.52%	21.33%
Amkor Technology	5.57%	8.66%	4.83%

Institutional and Insider Ownership

80.6% of Applied Materials shares are owned by institutional investors. Comparatively, 42.8% of Amkor Technology shares are owned by institutional investors. 0.3% of Applied Materials shares are owned by insiders. Comparatively, 26.9% of Amkor Technology shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Applied Materials pays an annual dividend of $1.84 per share and has a dividend yield of 0.5%. Amkor Technology pays an annual dividend of $0.33 per share and has a dividend yield of 0.7%. Applied Materials pays out 18.8% of its earnings in the form of a dividend. Amkor Technology pays out 21.9% 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. Applied Materials has raised its dividend for 8 consecutive years and Amkor Technology has raised its dividend for 4 consecutive years.

Summary

Applied Materials beats Amkor Technology on 14 of the 18 factors compared between the two stocks.

About Applied Materials

Applied Materials, Inc. engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices. It operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. The company was incorporated in 1967 and is headquartered in Santa Clara, California.

About Amkor Technology

Amkor Technology, Inc. provides outsourced semiconductor packaging and test services in the United States, Japan, Europe, the Middle East, Africa, and the Asia Pacific. It offers turnkey packaging and test services, including semiconductor wafer bump, wafer probe, wafer back-grind, package design, packaging, system-level and final test, and drop shipment services; flip chip scale package products for smartphones, tablets, and other mobile consumer electronic devices; flip chip stacked chip scale packages that are used to stack memory digital baseband, and as applications processors in mobile devices; flip-chip ball grid array packages for various networking, storage, computing, automotive, and consumer applications; and memory products for system memory or platform data storage. The company also provides wafer-level CSP packages for power management, transceivers, sensors, wireless charging, codecs, radar, and specialty silicon; wafer-level fan-out packages used in power management, transceivers, radar, and specialty silicon; silicon wafer integrated fan-out technology that replaces a laminate substrate with a thinner structure; leadframe packages for electronic devices and mixed-signal applications; and substrate-based wirebond packages used to connect a die to a substrate. In addition, it offers micro-electro-mechanical systems packages that are miniaturized mechanical and electromechanical devices; and advanced system-in-package modules used in radio frequency and front end modules, basebands, connectivity, fingerprint sensors, display and touch screen drivers, sensors and MEMS, and NAND memory and solid-state drives. Further, the company provides wafer, package, and system level test services, as well as burn-in test and test development services. It serves integrated device manufacturers, fabless semiconductor companies, original equipment manufacturers, and contract foundries. The company was founded in 1968 and is headquartered in Tempe, Arizona.