Reviewing Nanometrics (NANO) & Xcerra Corporation (XCRA)

Nanometrics (NASDAQ: NANO) and Xcerra Corporation (NASDAQ:XCRA) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Valuation and Earnings

This table compares Nanometrics and Xcerra Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nanometrics $241.61 million 3.03 $41.73 million $1.88 15.25
Xcerra Corporation $390.77 million 1.37 $34.79 million $0.42 23.36

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

Institutional and Insider Ownership

81.3% of Nanometrics shares are owned by institutional investors. Comparatively, 86.1% of Xcerra Corporation shares are owned by institutional investors. 6.7% of Nanometrics shares are owned by company insiders. Comparatively, 2.6% of Xcerra Corporation 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 Recommendations

This is a summary of current ratings for Nanometrics and Xcerra Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nanometrics 0 0 3 0 3.00
Xcerra Corporation 0 5 0 0 2.00

Nanometrics presently has a consensus target price of $31.67, suggesting a potential upside of 10.45%. Xcerra Corporation has a consensus target price of $10.25, suggesting a potential upside of 4.49%. Given Nanometrics’ stronger consensus rating and higher possible upside, analysts clearly believe Nanometrics is more favorable than Xcerra Corporation.

Profitability

This table compares Nanometrics and Xcerra Corporation’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%
Xcerra Corporation 5.77% 9.08% 6.71%

Volatility and Risk

Nanometrics has a beta of 1.8, meaning that its share price is 80% more volatile than the S&P 500. Comparatively, Xcerra Corporation has a beta of 1.61, meaning that its share price is 61% more volatile than the S&P 500.

Summary

Nanometrics beats Xcerra Corporation on 12 of the 14 factors compared between the two stocks.

Nanometrics Company Profile

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.

Xcerra Corporation Company Profile

Xcerra Corporation is a provider of test and handling capital equipment, interface products, test fixtures and related services to the semiconductor and electronics manufacturing industries. The Company operates through six segments: Semiconductor Test, Semiconductor Handlers, Contactors, PCB Test, Probes/Pins and Fixtures. The Semiconductor Test segment includes operations related to the design, manufacture and sale of automated test equipment for the semiconductor industry that is used to test system-on-a-chip, digital, analog and mixed signal integrated circuits. The Semiconductor Handlers segment includes operations related to the design, manufacture and sale of test handlers used in the testing of integrated circuits. The Contactors segment includes operations related to the design, manufacture and sale of test contactors. The PCB test segment includes operations related to design, manufacture and sale of equipment used in the testing of bare and loaded printed circuit boards.

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