Head to Head Contrast: Analog Devices (NASDAQ:ADI) and KLA (NASDAQ:KLAC)

KLA (NASDAQ:KLAC) and Analog Devices (NASDAQ:ADI) are both large-cap technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, valuation, analyst recommendations, profitability and earnings.

Valuation and Earnings

This table compares KLA and Analog Devices”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KLA	$13.58 billion	17.38	$4.83 billion	$3.67	49.22
Analog Devices	$13.88 billion	13.22	$2.27 billion	$8.43	44.93

KLA has higher earnings, but lower revenue than Analog Devices. Analog Devices is trading at a lower price-to-earnings ratio than KLA, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

86.7% of KLA shares are owned by institutional investors. Comparatively, 86.8% of Analog Devices shares are owned by institutional investors. 91.5% of KLA shares are owned by insiders. Comparatively, 0.4% of Analog Devices shares are owned 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 KLA and Analog Devices’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KLA	35.57%	87.66%	29.23%
Analog Devices	29.79%	16.39%	11.49%

Risk & Volatility

KLA has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500. Comparatively, Analog Devices has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for KLA and Analog Devices, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KLA	0	9	19	1	2.72
Analog Devices	0	2	26	2	3.00

KLA currently has a consensus target price of $222.22, suggesting a potential upside of 23.02%. Analog Devices has a consensus target price of $457.97, suggesting a potential upside of 20.91%. Given KLA’s higher possible upside, equities analysts plainly believe KLA is more favorable than Analog Devices.

Dividends

KLA pays an annual dividend of $0.92 per share and has a dividend yield of 0.5%. Analog Devices pays an annual dividend of $4.40 per share and has a dividend yield of 1.2%. KLA pays out 25.1% of its earnings in the form of a dividend. Analog Devices pays out 52.2% 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. KLA has raised its dividend for 16 consecutive years and Analog Devices has raised its dividend for 23 consecutive years. Analog Devices is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

KLA beats Analog Devices on 10 of the 18 factors compared between the two stocks.

About KLA

KLA Corporation, together with its subsidiaries, engages in the design, manufacture, and marketing of process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide. It operates through three segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection. The company offers inspection and review tools to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and unpatterned wafers; metrology systems that are used to measure pattern dimensions, film thickness, film stress, layer-to-layer alignment, pattern placement, surface topography, and electro-optical properties for wafers; chemical process control equipment; wired and wireless sensor wafers and reticles; wafer defect inspection, review, and metrology systems; reticle inspection and metrology systems; and semiconductor software solutions that provide run-time process control, defect excursion identification, process corrections, and defect classification to accelerate yield learning rates and reduce production risk. It also provides etch, plasma dicing, deposition, and other wafer processing technologies and solutions for the semiconductor and microelectronics industry. In addition, the company offers direct imaging, inspection, optical shaping, inkjet and additive printing, UV laser drilling, and computer-aided manufacturing and engineering solutions for the PCB market; inspection and electrical testing systems to identify and classify defects, as well as systems to repair defects for the display market; and inspection and metrology systems for quality control and yield improvement in advanced and traditional semiconductor packaging markets. The company was formerly known as KLA-Tencor Corporation and changed its name to KLA Corporation in July 2019. KLA Corporation was incorporated in 1975 and is headquartered in Milpitas, California.

About Analog Devices

Analog Devices, Inc. designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems products in the United States, rest of North and South America, Europe, Japan, China, and rest of Asia. The company provides data converter products, which translate real-world analog signals into digital data, as well as translates digital data into analog signals; power management and reference products for power conversion, driver monitoring, sequencing, and energy management applications in the automotive, communications, industrial, and consumer markets; and power ICs that include performance, integration, and software design simulation tools for accurate power supply designs. It also offers amplifiers to condition analog signals; and radio frequency and microwave ICs to support cellular infrastructure; and micro-electro-mechanical systems technology solutions, including accelerometers used to sense acceleration, gyroscopes for sense rotation, inertial measurement units to sense multiple degrees of freedom, and broadband switches for radio and instrument systems, as well as isolators. In addition, the company provides digital signal processing and system products for numeric calculations. It serves clients in the industrial, automotive, consumer, instrumentation, aerospace, defense and healthcare, and communications markets through a direct sales force, third-party distributors, and independent sales representatives, as well as online. Analog Devices, Inc. was incorporated in 1965 and is headquartered in Wilmington, Massachusetts.