Critical Review: Ralliant (NYSE:RAL) and Advantest (OTCMKTS:ATEYY)

Ralliant (NYSE:RAL) and Advantest (OTCMKTS:ATEYY) are both technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Institutional and Insider Ownership

0.0% of Advantest shares are owned by institutional investors. 0.4% of Ralliant shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Ralliant and Advantest’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ralliant	-56.38%	14.97%	6.99%
Advantest	39.57%	67.22%	45.56%

Valuation and Earnings

This table compares Ralliant and Advantest”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ralliant	$2.07 billion	3.77	-$1.22 billion	($10.85)	-6.50
Advantest	$7.50 billion	22.95	$2.48 billion	$4.06	57.90

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

Analyst Recommendations

This is a breakdown of recent ratings for Ralliant and Advantest, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ralliant	0	5	7	0	2.58
Advantest	0	0	0	2	4.00

Ralliant currently has a consensus target price of $77.40, indicating a potential upside of 9.77%. Given Ralliant’s higher probable upside, analysts plainly believe Ralliant is more favorable than Advantest.

Volatility and Risk

Ralliant has a beta of 1.39, suggesting that its stock price is 39% more volatile than the S&P 500. Comparatively, Advantest has a beta of 2.17, suggesting that its stock price is 117% more volatile than the S&P 500.

Dividends

Ralliant pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. Advantest pays an annual dividend of $0.26 per share and has a dividend yield of 0.1%. Ralliant pays out -1.8% of its earnings in the form of a dividend. Advantest pays out 6.4% 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. Ralliant is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Advantest beats Ralliant on 12 of the 17 factors compared between the two stocks.

About Ralliant

Ralliant Corporation is a provider of precision technologies which specializes in designing, developing, manufacturing and servicing precision instruments and engineered products. Ralliant Corporation is based in RALEIGH, N.C.

About Advantest

Advantest Corporation manufactures and sells semiconductors, component test system products, and mechatronics related products in Japan, the Americas, Europe, and Asia. The company operates through three segments: Semiconductor and Component Test System; Mechatronics Related Business; and Services, Support and Others. The Semiconductor and Component Test System segment provides customers with test system products for the semiconductor industry and the electronic parts industry, as well as offers test systems for SoC semiconductor devices, and test systems for memory semiconductors devices. The Mechatronics Related Business segment provides test handlers; mechatronic-applied products for handling semiconductor devices; and device interfaces, which serve as interfaces with the devices that are measured, as well as nano-technology related products. The Services, Support and Others segment provides test solutions of system level testing customer solutions for the semiconductor and modules, and support services. This segment is also involved in the sale of consumables and used products, and equipment lease and other businesses. It also engages in the research and development activities and provides maintenance and support services. The company was incorporated in 1946 and is headquartered in Tokyo, Japan.