Kulicke and Soffa Industries (NASDAQ:KLIC) vs. Sumco (OTCMKTS:SUOPY) Critical Analysis

Sumco (OTCMKTS:SUOPY) and Kulicke and Soffa Industries (NASDAQ:KLIC) are both mid-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, earnings, dividends, analyst recommendations, institutional ownership, risk and valuation.

Earnings & Valuation

This table compares Sumco and Kulicke and Soffa Industries”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sumco	$3.04 billion	1.06	$453.58 million	$0.80	23.08
Kulicke and Soffa Industries	$727.23 million	3.60	$57.15 million	($1.04)	-46.19

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

Risk & Volatility

Sumco has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500. Comparatively, Kulicke and Soffa Industries has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500.

Dividends

Sumco pays an annual dividend of $0.29 per share and has a dividend yield of 1.6%. Kulicke and Soffa Industries pays an annual dividend of $0.80 per share and has a dividend yield of 1.7%. Sumco pays out 36.2% of its earnings in the form of a dividend. Kulicke and Soffa Industries pays out -76.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Kulicke and Soffa Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Sumco and Kulicke and Soffa Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sumco	0	0	0	0	0.00
Kulicke and Soffa Industries	0	3	1	0	2.25

Kulicke and Soffa Industries has a consensus price target of $47.33, suggesting a potential downside of 1.47%. Given Kulicke and Soffa Industries’ stronger consensus rating and higher probable upside, analysts clearly believe Kulicke and Soffa Industries is more favorable than Sumco.

Insider and Institutional Ownership

0.0% of Sumco shares are owned by institutional investors. Comparatively, 98.2% of Kulicke and Soffa Industries shares are owned by institutional investors. 0.0% of Kulicke and Soffa Industries shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Sumco and Kulicke and Soffa Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sumco	6.66%	4.15%	2.38%
Kulicke and Soffa Industries	-7.94%	0.61%	0.47%

Summary

Kulicke and Soffa Industries beats Sumco on 9 of the 16 factors compared between the two stocks.

About Sumco

Sumco Corporation manufactures and sells silicon wafers for the semiconductor industry in Japan, the United States, China, Taiwan, Korea, and internationally. It provides monocrystalline ingots, as well as polished, annealed, epitaxial, junction isolated, silicon-on-insulator, and reclaimed polished wafers. The company was formerly known as Sumitomo Mitsubishi Silicon Corp. and changed its name to Sumco Corporation in August 2005. Sumco Corporation was incorporated in 1999 and is headquartered in Tokyo, Japan.

About Kulicke and Soffa Industries

Kulicke and Soffa Industries, Inc. designs, manufactures, and sells capital equipment and tools used to assemble semiconductor devices. It operates through four segments: Ball Bonding Equipment, Wedge Bonding Equipment, Advanced Solutions, and Aftermarket Products and Services (APS). The company offers ball bonding equipment, wafer level bonding equipment, wedge bonding equipment; and advanced display, die-attach, and thermocompression systems and solutions, as well as tools, spares and services for equipment. It also services, maintains, repairs, and upgrades equipment. The company serves semiconductor device manufacturers, integrated device manufacturers, outsourced semiconductor assembly and test providers, other electronics manufacturers, industrial manufacturers, foundry service providers, and automotive electronics suppliers primarily in the United States and the Asia/Pacific region. The company was founded in 1951 and is headquartered in Fort Washington, Pennsylvania.