Onto Innovation (NYSE:ONTO) vs. NVE (NASDAQ:NVEC) Critical Review

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

Analyst Ratings

This is a breakdown of recent ratings for Onto Innovation and NVE, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Onto Innovation	0	1	11	2	3.07
NVE	0	1	0	0	2.00

Onto Innovation currently has a consensus price target of $377.73, indicating a potential upside of 97.08%. Given Onto Innovation’s stronger consensus rating and higher probable upside, analysts plainly believe Onto Innovation is more favorable than NVE.

Profitability

This table compares Onto Innovation and NVE’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Onto Innovation	11.84%	13.44%	10.30%
NVE	58.15%	30.52%	29.51%

Earnings & Valuation

This table compares Onto Innovation and NVE”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Onto Innovation	$1.12 billion	8.40	$136.76 million	$2.66	72.05
NVE	$30.75 million	12.76	$15.20 million	$3.69	21.94

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

Insider and Institutional Ownership

98.3% of Onto Innovation shares are held by institutional investors. Comparatively, 65.9% of NVE shares are held by institutional investors. 0.5% of Onto Innovation shares are held by company insiders. Comparatively, 2.1% of NVE shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Onto Innovation has a beta of 1.66, indicating that its share price is 66% more volatile than the S&P 500. Comparatively, NVE has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500.

Summary

Onto Innovation beats NVE on 9 of the 15 factors compared between the two stocks.

About Onto Innovation

Onto Innovation Inc. engages in the design, development, manufacture, and support of process control tools that performs optical metrology. The company offers lithography systems and process control analytical software. It also offers process and yield management solutions, and device packaging and test facilities through standalone systems for optical metrology, macro-defect inspection, packaging lithography, and transparent and opaque thin film measurements. In addition, the company provides process control software portfolio that includes solutions for standalone tools, groups of tools, and enterprise-or factory-wide suites. Further, it engages in systems software, spare parts, and other services, as well as offers software licensing services. The company's products are used in semiconductor and advanced packaging device manufacturers; silicon wafer; light emitting diode; vertical-cavity surface-emitting laser; micro-electromechanical system; CMOS image sensor; power device; analog device; RF filter; data storage; and various industrial and scientific applications. Onto Innovation Inc. was founded in 1940 and is headquartered in Wilmington, Massachusetts.

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.