Analyzing NVE (NASDAQ:NVEC) and Lam Research (NASDAQ:LRCX)

Lam Research (NASDAQ:LRCX) and NVE (NASDAQ:NVEC) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, dividends, analyst recommendations and profitability.

Volatility and Risk

Lam Research has a beta of 1.78, suggesting that its stock price is 78% more volatile than the S&P 500. Comparatively, NVE has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500.

Institutional and Insider Ownership

84.6% of Lam Research shares are owned by institutional investors. Comparatively, 66.0% of NVE shares are owned by institutional investors. 0.3% of Lam Research shares are owned by insiders. Comparatively, 1.9% of NVE 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.

Analyst Recommendations

This is a breakdown of current ratings for Lam Research and NVE, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lam Research	0	7	27	1	2.83
NVE	0	1	0	0	2.00

Lam Research currently has a consensus target price of $245.35, suggesting a potential upside of 12.32%. Given Lam Research’s stronger consensus rating and higher possible upside, research analysts plainly believe Lam Research is more favorable than NVE.

Dividends

Lam Research pays an annual dividend of $1.04 per share and has a dividend yield of 0.5%. NVE pays an annual dividend of $4.00 per share and has a dividend yield of 5.8%. Lam Research pays out 21.3% of its earnings in the form of a dividend. NVE pays out 137.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lam Research has raised its dividend for 10 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Lam Research	30.22%	62.81%	29.48%
NVE	54.59%	23.47%	22.73%

Earnings and Valuation

This table compares Lam Research and NVE”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lam Research	$20.56 billion	13.27	$5.36 billion	$4.88	44.76
NVE	$25.88 million	12.96	$15.06 million	$2.92	23.73

Lam Research has higher revenue and earnings than NVE. NVE 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 NVE on 15 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 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.