Critical Review: Axcelis Technologies (ACLS) and Nanometrics (NANO)

Nanometrics (NASDAQ: NANO) and Axcelis Technologies (NASDAQ:ACLS) are both small-cap technology companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, valuation, risk, institutional ownership, analyst recommendations, earnings and profitability.

Profitability

This table compares Nanometrics and Axcelis Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nanometrics 19.23% 10.26% 8.68%
Axcelis Technologies 30.92% 20.95% 14.01%

Analyst Ratings

This is a breakdown of recent ratings for Nanometrics and Axcelis Technologies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nanometrics 0 0 2 0 3.00
Axcelis Technologies 0 1 4 0 2.80

Nanometrics currently has a consensus price target of $32.00, suggesting a potential upside of 23.22%. Axcelis Technologies has a consensus price target of $31.80, suggesting a potential upside of 33.05%. Given Axcelis Technologies’ higher possible upside, analysts clearly believe Axcelis Technologies is more favorable than Nanometrics.

Institutional and Insider Ownership

83.1% of Nanometrics shares are owned by institutional investors. Comparatively, 77.5% of Axcelis Technologies shares are owned by institutional investors. 6.7% of Nanometrics shares are owned by company insiders. Comparatively, 5.7% of Axcelis Technologies shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Nanometrics and Axcelis Technologies’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nanometrics $221.13 million 3.01 $44.03 million $1.17 22.20
Axcelis Technologies $410.56 million 1.83 $11.00 million $3.74 6.39

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

Volatility & Risk

Nanometrics has a beta of 1.65, indicating that its share price is 65% more volatile than the S&P 500. Comparatively, Axcelis Technologies has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

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 Axcelis Technologies

Axcelis Technologies, Inc. designs, manufactures and services ion implantation and other processing equipment used in the fabrication of semiconductor chips. The Company also provides aftermarket lifecycle products and services, including used tools, spare parts, equipment upgrades, maintenance services and customer training. The Company offers a complete line of high energy, high current and medium current implanters for all application requirements. The Company’s Purion XE high energy system combines its radio frequency (RF) Linac high energy, spot beam technology with the Purion platform. The Company also offers the Purion M medium current system. The Company’s Purion M systems also offer differentiation for specialty applications, such as hot silicon carbide. The Company’s Purion H high current system is extendable into ultra-low energy applications to satisfy future process requirements, including leakage current performance.

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