Veeco (VECO) vs. Brooks Automation (BRKS) Critical Review

Veeco (NASDAQ: VECO) and Brooks Automation (NASDAQ:BRKS) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, earnings, risk and institutional ownership.

Insider & Institutional Ownership

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99.9% of Veeco shares are held by institutional investors. Comparatively, 90.2% of Brooks Automation shares are held by institutional investors. 2.6% of Veeco shares are held by insiders. Comparatively, 2.4% of Brooks Automation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Veeco and Brooks Automation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Veeco -9.24% -0.12% -0.07%
Brooks Automation 9.03% 14.43% 10.72%

Dividends

Brooks Automation pays an annual dividend of $0.40 per share and has a dividend yield of 1.5%. Veeco does not pay a dividend. Brooks Automation pays out 32.3% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent ratings for Veeco and Brooks Automation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Veeco 0 2 4 0 2.67
Brooks Automation 0 2 5 0 2.71

Veeco presently has a consensus price target of $28.67, suggesting a potential upside of 68.63%. Brooks Automation has a consensus price target of $33.57, suggesting a potential upside of 23.97%. Given Veeco’s higher probable upside, equities research analysts clearly believe Veeco is more favorable than Brooks Automation.

Risk and Volatility

Veeco has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500. Comparatively, Brooks Automation has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500.

Earnings and Valuation

This table compares Veeco and Brooks Automation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Veeco $484.76 million 1.69 -$44.79 million ($0.02) -850.00
Brooks Automation $692.89 million 2.75 $62.61 million $1.24 21.84

Brooks Automation has higher revenue and earnings than Veeco. Veeco is trading at a lower price-to-earnings ratio than Brooks Automation, indicating that it is currently the more affordable of the two stocks.

Summary

Brooks Automation beats Veeco on 12 of the 16 factors compared between the two stocks.

About Veeco

Veeco Instruments Inc., together with its subsidiaries, develops, manufactures, sells, and supports semiconductor process equipment worldwide. It offers metal organic chemical vapor deposition systems; packaging lithography equipment; precision surface processing systems; laser annealing systems; ion beam etch and deposition systems; molecular beam epitaxy systems; 3D wafer inspection systems; and atomic layer deposition and other deposition systems. The company sells its products to light emitting diode, micro-electro mechanical system, outsourced semiconductor assembly and test, HDD, and semiconductor manufacturers, as well as research centers and universities. Veeco Instruments Inc. was founded in 1945 and is headquartered in Plainview, New York.

About Brooks Automation

Brooks Automation, Inc. provides automation and cryogenic solutions for various applications and markets. It operates in two segments, Brooks Semiconductor Solutions Group and Brooks Life Science Systems. The Brooks Semiconductor Solutions Group segment offers critical automated transport, vacuum, and contamination controls solutions and services. Its products include atmospheric and vacuum robots, robotic modules, and tool automation systems that offer precision handling and clean wafer environments; automated cleaning and inspection systems for wafer carriers, as well as reticle pod cleaners and stockers; and vacuum pumping and thermal management solutions for critical process vacuum applications. This segment also offers repair, diagnostic, and installation services, as well as spare parts and productivity enhancement upgrade services. The Brooks Life Science Systems segment provides automated cold storage systems; consumables, including various formats of racks, tubes, caps, plates, and foils; and instruments used for labeling, bar coding, capping, decapping, auditing, sealing, peeling, and piercing tubes and plates. It also provides sample management services, such as on-site and off-site sample storage, cold chain logistics, sample relocation, bio-processing, disaster recovery, and business continuity, as well as project management and consulting. In addition, this segment offers sample intelligence software solutions and customer technology integration; and laboratory work flow scheduling for life science tools and instrument work cells, sample inventory and logistics, environmental and temperature monitoring, and clinical trial and consent management, as well as planning, data management, virtualization, and visualization services. The company serves semiconductor capital equipment and sample management markets for life sciences in approximately 50 countries. Brooks Automation, Inc. was founded in 1978 and is headquartered in Chelmsford, Massachusetts.

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