Critical Analysis: FormFactor (FORM) & Axcelis Technologies (ACLS)

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

Profitability

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

Net Margins Return on Equity Return on Assets
FormFactor 3.68% 16.80% 11.20%
Axcelis Technologies 10.80% 16.37% 10.94%

Volatility & Risk

FormFactor has a beta of 1.46, indicating that its share price is 46% more volatile than the S&P 500. Comparatively, Axcelis Technologies has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500.

Insider & Institutional Ownership

84.6% of FormFactor shares are held by institutional investors. Comparatively, 78.0% of Axcelis Technologies shares are held by institutional investors. 2.3% of FormFactor shares are held by company insiders. Comparatively, 5.7% of Axcelis Technologies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for FormFactor and Axcelis Technologies, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FormFactor 0 1 4 1 3.00
Axcelis Technologies 0 2 3 0 2.60

FormFactor currently has a consensus target price of $19.07, suggesting a potential upside of 25.44%. Axcelis Technologies has a consensus target price of $30.40, suggesting a potential upside of 12.93%. Given FormFactor’s stronger consensus rating and higher probable upside, analysts plainly believe FormFactor is more favorable than Axcelis Technologies.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FormFactor $383.88 million 2.89 -$6.55 million $0.26 58.46
Axcelis Technologies $266.98 million 3.17 $11.00 million $1.19 22.62

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

Summary

FormFactor beats Axcelis Technologies on 10 of the 15 factors compared between the two stocks.

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.

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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