Comparing Tower Semiconductor (NASDAQ:TSEM) & Ultra Clean (NASDAQ:UCTT)

Tower Semiconductor (NASDAQ:TSEM) and Ultra Clean (NASDAQ:UCTT) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, earnings, profitability, institutional ownership and analyst recommendations.

Risk & Volatility

Tower Semiconductor has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, Ultra Clean has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500.

Institutional and Insider Ownership

52.4% of Tower Semiconductor shares are owned by institutional investors. Comparatively, 83.0% of Ultra Clean shares are owned by institutional investors. 1.0% of Tower Semiconductor shares are owned by company insiders. Comparatively, 1.8% of Ultra Clean shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Tower Semiconductor and Ultra Clean’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tower Semiconductor $1.30 billion 1.82 $135.58 million $1.51 15.96
Ultra Clean $1.10 billion 0.92 $36.60 million $1.66 15.25

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

Analyst Ratings

This is a summary of current ratings for Tower Semiconductor and Ultra Clean, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tower Semiconductor 0 1 2 0 2.67
Ultra Clean 0 3 3 0 2.50

Tower Semiconductor presently has a consensus target price of $26.57, suggesting a potential upside of 10.25%. Ultra Clean has a consensus target price of $21.40, suggesting a potential downside of 15.45%. Given Tower Semiconductor’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Tower Semiconductor is more favorable than Ultra Clean.

Profitability

This table compares Tower Semiconductor and Ultra Clean’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tower Semiconductor 8.51% 9.63% 6.65%
Ultra Clean -0.02% 7.39% 3.38%

Summary

Tower Semiconductor beats Ultra Clean on 10 of the 14 factors compared between the two stocks.

About Tower Semiconductor

Tower Semiconductor Ltd., an independent semiconductor foundry, manufactures and markets analog intensive mixed-signal semiconductor devices in the United States, Japan, Asia, and Europe. It provides various customizable process technologies, including SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, integrated power management, and MEMS. The company also offers transfer optimization and development process services to integrated device manufacturers and fabless companies. It serves various markets, such as automotive, medical and dental, professional photography, industrial and machine vision, AR and 3D gesture control, security, space and scientific, projectors and display, consumer, aerospace and defense, computers and servers, as well as Internet of Things; timing controllers; digital, mixed-signal/CMOS & RFCMOS; and display driver IC. The company was founded in 1993 and is headquartered in Migdal Haemek, Israel.

About Ultra Clean

Ultra Clean Holdings, Inc. designs, develops, prototypes, engineers, manufactures, and tests production tools, modules, and subsystems for the semiconductor and display capital equipment industries primarily in North America, Asia, and Europe. It offers precision robotic systems that are used when accurate controlled motion is required; gas delivery systems, which include one or more gas lines consisting of small diameter internally polished stainless steel tubing products, filters, mass flow controllers, regulators, pressure transducers and valves, component heaters, and an integrated electronic and/or pneumatic control system; and various industrial and automation production equipment products. The company also provides subsystems, such as wafer cleaning modules; chemical delivery modules that deliver gases and reactive chemicals in a liquid or gaseous form from a centralized subsystem to the reaction chamber; frame assemblies, which are support structures fabricated from steel tubing or folded sheet metal; and top-plate assemblies. In addition, it offers fluid delivery systems consists of one or more chemical delivery units; process modules, which are the subsystems of semiconductor manufacturing tools that process integrated circuits onto wafers; and other high level assemblies. The company primarily serves original equipment manufacturing customers in the semiconductor capital equipment, consumer, medical, energy, industrial, and research industries. Ultra Clean Holding, Inc. was founded in 1991 and is headquartered in Hayward, California.

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