Contrasting ChipMOS Technologies (NASDAQ:IMOS) & Applied Materials (AMAT)

ChipMOS Technologies (NASDAQ: IMOS) and Applied Materials (NASDAQ:AMAT) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, analyst recommendations, valuation, institutional ownership, profitability and earnings.

Profitability

This table compares ChipMOS Technologies and Applied Materials’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ChipMOS Technologies 3.81% 4.00% 2.15%
Applied Materials 19.24% 51.65% 22.65%

Risk & Volatility

ChipMOS Technologies has a beta of 0.27, indicating that its stock price is 73% less volatile than the S&P 500. Comparatively, Applied Materials has a beta of 1.64, indicating that its stock price is 64% more volatile than the S&P 500.

Institutional and Insider Ownership

10.2% of ChipMOS Technologies shares are held by institutional investors. Comparatively, 78.7% of Applied Materials shares are held by institutional investors. 0.4% of Applied Materials shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for ChipMOS Technologies and Applied Materials, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ChipMOS Technologies 0 0 0 0 N/A
Applied Materials 0 4 18 1 2.87

Applied Materials has a consensus price target of $64.43, suggesting a potential upside of 29.67%. Given Applied Materials’ higher probable upside, analysts clearly believe Applied Materials is more favorable than ChipMOS Technologies.

Earnings and Valuation

This table compares ChipMOS Technologies and Applied Materials’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ChipMOS Technologies $605.30 million 1.06 $94.36 million $0.95 15.77
Applied Materials $14.54 billion 3.45 $3.43 billion $3.25 15.29

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

Dividends

ChipMOS Technologies pays an annual dividend of $0.46 per share and has a dividend yield of 3.1%. Applied Materials pays an annual dividend of $0.80 per share and has a dividend yield of 1.6%. ChipMOS Technologies pays out 48.4% of its earnings in the form of a dividend. Applied Materials pays out 24.6% 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.

Summary

Applied Materials beats ChipMOS Technologies on 14 of the 16 factors compared between the two stocks.

About ChipMOS Technologies

ChipMOS TECHNOLOGIES INC. researches, develops, manufactures, and sells high integration and high precision integrated circuits, and related assembly and testing services. It provides a range of back-end assembly and test services, including engineering test, wafer probing and final test of memory and logic/mixed-signal semiconductors, as well as leadframe-and organic substrate-based package assembly services for memory and logic/mixed-signal semiconductors; and gold bumping, reel to reel assembly, and test services for LCD and other flat-panel display driver semiconductors. The company's semiconductors are used in personal computers; graphics applications, such as game consoles; communications equipment; mobile products comprising cellular handsets, tablets, and consumer electronic products; and automotive/industry and display applications, such as flat-panel displays. It serves customers in Taiwan, Japan, Korea, Hong Kong, and the United States. The company was founded in 1997 and is headquartered in Hsinchu, Taiwan.

About Applied Materials

Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, display, and related industries worldwide. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits. It offers products and technologies for transistor and interconnect fabrication, including epitaxy, ion implantation, oxidation and nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays, organic light-emitting diodes, and other display technologies for TVs, personal computers, electronic tablets, smart phones, and other consumer-oriented devices, as well as equipment for flexible substrates. The company serves manufacturers of semiconductor wafers and chips, liquid crystal and organic light-emitting diode displays, and other electronic devices. Applied Materials, Inc. was founded in 1967 and is headquartered in Santa Clara, California.

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