Analyzing Nanometrics (NANO) and FormFactor (FORM)

Nanometrics (NASDAQ: NANO) and FormFactor (NASDAQ:FORM) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, dividends, risk, institutional ownership, profitability and valuation.

Volatility and Risk

Nanometrics has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500. Comparatively, FormFactor has a beta of 1.61, indicating that its stock price is 61% more volatile than the S&P 500.

Institutional and Insider Ownership

78.5% of Nanometrics shares are owned by institutional investors. Comparatively, 89.2% of FormFactor shares are owned by institutional investors. 6.7% of Nanometrics shares are owned by company insiders. Comparatively, 2.8% of FormFactor shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations for Nanometrics and FormFactor, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nanometrics 0 0 3 0 3.00
FormFactor 0 1 6 0 2.86

Nanometrics presently has a consensus price target of $31.67, indicating a potential upside of 24.77%. FormFactor has a consensus price target of $16.43, indicating a potential upside of 20.36%. Given Nanometrics’ stronger consensus rating and higher possible upside, research analysts plainly believe Nanometrics is more favorable than FormFactor.

Profitability

This table compares Nanometrics and FormFactor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nanometrics 19.94% 11.95% 10.01%
FormFactor -1.32% 15.62% 10.19%

Earnings and Valuation

This table compares Nanometrics and FormFactor’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nanometrics $241.61 million 2.68 $41.73 million $1.88 13.50
FormFactor $519.99 million 1.90 $61.41 million ($0.11) -124.09

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

About Nanometrics

Nanometrics Incorporated is a provider of process control metrology and inspection systems used primarily in the fabrication of semiconductors and other solid-state devices, including sensors, optoelectronic devices, high-brightness (HB) light emitting diodes (LEDs), discretes and data storages components. The Company’s automated and integrated metrology systems measure critical dimensions, device structures, topography and various thin film properties, including three-dimensional features and film thickness, as well as optical, electrical and material properties. The Company’s process control solutions are deployed throughout the fabrication process, from front-end-of-line substrate manufacturing, to production of semiconductors and other devices, to three-dimensional wafer-level packaging applications. The Company’s automated systems primarily consist of automated metrology systems that are employed in semiconductor production environments.

About FormFactor

FormFactor, Inc. is a provider of test and measurement solutions. The Company’s segments include the Probe Cards segment and Systems segment. The Company designs, manufactures and sells multiple product lines, including probe cards, analytical probes, probe stations, integrated measurement systems, thermal sub-systems, reliability test systems, and related services. Its products provide electrical information from a range of semiconductor and electro-optical devices and integrated circuits (devices) from development to production. Probe Cards segment consists of probe card products and analytical probes. Systems segment consists of wafer probing, thermal and reliability products to enable precision on-wafer measurement of integrated circuits. Systems products are used in the early phases of the development and characterization of semiconductor processes.

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