Comparing KLA-Tencor (KLAC) & Sensata Technologies (ST)

Sensata Technologies (NYSE: ST) and KLA-Tencor (NASDAQ:KLAC) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares Sensata Technologies and KLA-Tencor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sensata Technologies 12.35% 25.40% 8.47%
KLA-Tencor 17.28% 85.81% 20.18%

Earnings & Valuation

This table compares Sensata Technologies and KLA-Tencor’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sensata Technologies $3.31 billion 2.69 $408.35 million $3.19 16.25
KLA-Tencor $3.48 billion 4.88 $926.07 million $5.94 18.35

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

Insider & Institutional Ownership

91.7% of KLA-Tencor shares are owned by institutional investors. 1.0% of Sensata Technologies shares are owned by insiders. Comparatively, 0.2% of KLA-Tencor shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Sensata Technologies has a beta of 1.51, indicating that its stock price is 51% more volatile than the S&P 500. Comparatively, KLA-Tencor has a beta of 1.43, indicating that its stock price is 43% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Sensata Technologies and KLA-Tencor, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sensata Technologies 0 5 6 0 2.55
KLA-Tencor 0 3 10 0 2.77

Sensata Technologies presently has a consensus target price of $56.45, suggesting a potential upside of 8.92%. KLA-Tencor has a consensus target price of $122.08, suggesting a potential upside of 11.99%. Given KLA-Tencor’s stronger consensus rating and higher probable upside, analysts clearly believe KLA-Tencor is more favorable than Sensata Technologies.

Dividends

KLA-Tencor pays an annual dividend of $2.36 per share and has a dividend yield of 2.2%. Sensata Technologies does not pay a dividend. KLA-Tencor pays out 39.7% of its earnings in the form of a dividend.

Summary

KLA-Tencor beats Sensata Technologies on 13 of the 16 factors compared between the two stocks.

About Sensata Technologies

Sensata Technologies Holding N.V. is an industrial technology company. The Company is engaged in the development, manufacture, and sale of sensors and controls. The Company operates through two segments: Performance Sensing and Sensing Solutions. It produces a range of sensors and controls for applications, such as pressure sensors in automotive systems, thermal circuit breakers in aircraft, and bimetal current and temperature control devices. Its sensors are devices that translate a physical phenomenon, such as pressure or position, into electronic signals that microprocessors can act upon. Its controls are customized devices embedded within systems to protect them from excessive heat or current. Its primary products include low-, medium-, and high-pressure sensors, speed and position sensors, bimetal electromechanical controls, temperature sensors, power conversion and control products, thermal and magnetic-hydraulic circuit breakers, pressure switches and interconnection products.

About KLA-Tencor

KLA-Tencor Corporation (KLA-Tencor) is a supplier of process control and yield management solutions for the semiconductor and related nanoelectronics industries. The Company’s products are also used in a number of other high technology industries, including the light emitting diode (LED) and data storage industries, as well as general materials research. Its products and services are used by bare wafer, integrated circuit (IC), lithography reticle (reticle or mask) and disk manufacturers around the world. The Company’s inspection and metrology products and related offerings are categorized in various groups, including Chip Manufacturing, Wafer Manufacturing, Reticle Manufacturing, LED, Power Device and Compound Semiconductor Manufacturing, Data Storage Media/Head Manufacturing, Microelectromechanical Systems (MEMS) Manufacturing, and General Purpose/Lab Applications. It also provides refurbished KLA-Tencor tools as service and support for its products.

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