Critical Review: FARO Technologies (FARO) & AMTEK (AME)

FARO Technologies (NASDAQ: FARO) and AMTEK (NYSE:AME) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Profitability

This table compares FARO Technologies and AMTEK’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FARO Technologies 0.03% 0.03% 0.02%
AMTEK 13.26% 16.28% 7.68%

Earnings and Valuation

This table compares FARO Technologies and AMTEK’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
FARO Technologies $335.54 million 2.30 $13.50 million $0.00 -4,625,000.00
AMTEK $3.99 billion 4.00 $1.04 billion $2.28 30.35

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

Dividends

AMTEK pays an annual dividend of $0.36 per share and has a dividend yield of 0.5%. FARO Technologies does not pay a dividend. AMTEK pays out 15.8% of its earnings in the form of a dividend.

Volatility and Risk

FARO Technologies has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500. Comparatively, AMTEK has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500.

Insider & Institutional Ownership

94.6% of FARO Technologies shares are owned by institutional investors. Comparatively, 85.6% of AMTEK shares are owned by institutional investors. 2.4% of FARO Technologies shares are owned by company insiders. Comparatively, 2.1% of AMTEK shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for FARO Technologies and AMTEK, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FARO Technologies 0 2 4 0 2.67
AMTEK 0 1 8 0 2.89

FARO Technologies presently has a consensus target price of $39.40, suggesting a potential downside of 14.81%. AMTEK has a consensus target price of $68.44, suggesting a potential downside of 1.08%. Given AMTEK’s stronger consensus rating and higher possible upside, analysts clearly believe AMTEK is more favorable than FARO Technologies.

Summary

AMTEK beats FARO Technologies on 11 of the 15 factors compared between the two stocks.

About FARO Technologies

FARO Technologies, Inc. designs, develops, manufactures, markets and supports software driven, three-dimensional (3D) measurement, imaging and realization systems. The Company operates in three segments: Factory Metrology, Construction BIM-CIM and Other. It sells its products through a direct sales force across customers in a range of manufacturing, industrial, architecture, surveying, building construction and law enforcement applications. Its FaroArm, FARO Laser ScanArm, FARO Gage, FARO Laser Tracker, FARO Cobalt Array 3D Imager AMP, and their companion CAM2 software provide for Computer-Aided Design-based inspection and/or factory-level statistical process control and surveying. It operates in international markets throughout the world and maintain sales offices in Australia, Brazil, Canada, China, India, Italy, Japan, Malaysia, Mexico, the Netherlands, Poland, Portugal, Singapore, South Korea, Spain, Switzerland, Thailand, Turkey, the United Kingdom, the United States and Vietnam.

About AMTEK

AMETEK, Inc. is a manufacturer of electronic instruments and electromechanical devices with operations in North America, Europe, Asia and South America. The Company operates through two segments: Electronic Instruments (EIG) and Electromechanical (EMG). EIG designs and manufactures instruments for the process, power and industrial and aerospace markets. EIG provides process and analytical instruments for the oil, gas, petrochemical, pharmaceutical, semiconductor and automation markets. It makes monitoring and metering devices, industrial battery chargers and uninterruptible power supplies, programmable power equipment, electrical test equipment and gas turbine sensors. EMG is a differentiated supplier of precision motion control solutions, thermal management systems, specialty metals and electrical interconnects. Its end markets include medical, automation, petrochemical and other industrial markets. It operates a network of aviation maintenance, repair and overhaul (MRO) facilities.

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