Critical Review: Nanometrics (NANO) and Fortive (FTV)

Fortive (NYSE: FTV) and Nanometrics (NASDAQ:NANO) are both technology companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, earnings, risk, dividends, valuation, analyst recommendations and profitability.

Valuation & Earnings

This table compares Fortive and Nanometrics’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fortive $6.22 billion 4.16 $872.30 million $2.65 28.10
Nanometrics $221.13 million 2.94 $44.03 million $1.79 14.20

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

Analyst Ratings

This is a breakdown of recent recommendations for Fortive and Nanometrics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fortive 0 7 6 0 2.46
Nanometrics 0 0 2 0 3.00

Fortive currently has a consensus price target of $70.40, suggesting a potential downside of 5.47%. Nanometrics has a consensus price target of $32.50, suggesting a potential upside of 27.85%. Given Nanometrics’ stronger consensus rating and higher possible upside, analysts clearly believe Nanometrics is more favorable than Fortive.

Dividends

Fortive pays an annual dividend of $0.28 per share and has a dividend yield of 0.4%. Nanometrics does not pay a dividend. Fortive pays out 10.6% of its earnings in the form of a dividend.

Institutional & Insider Ownership

78.8% of Fortive shares are held by institutional investors. Comparatively, 83.2% of Nanometrics shares are held by institutional investors. 12.1% of Fortive shares are held by insiders. Comparatively, 6.7% of Nanometrics shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Fortive and Nanometrics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fortive 14.39% 31.67% 11.32%
Nanometrics 19.23% 10.26% 8.68%

Summary

Fortive beats Nanometrics on 10 of the 15 factors compared between the two stocks.

About Fortive

Fortive Corporation is a diversified industrial growth company. The Company designs, develops, manufactures and markets professional and engineered products, software and services for a range of end markets. The Company operates through two segments: Professional Instrumentation and Industrial Technologies. The Company’s brands operate in field instrumentation, transportation, sensing, product realization, automation and specialty, and franchise distribution markets. The Professional Instrumentation segment offers essential products, software and services used to create actionable intelligence by measuring and monitoring a range of physical parameters in industrial applications, including electrical current, radio frequency signals, distance, pressure and temperature. The Industrial Technologies segment offers critical technical equipment, components, software and services for manufacturing, repair and transportation markets around the world.

About Nanometrics

Nanometrics Incorporated is a provider of process control metrology and inspection systems used primarily in the fabrication of semiconductors and other solid-state devices, including sensors, optoelectronic devices, high-brightness (HB) light emitting diodes (LEDs), discretes and data storages components. The Company’s automated and integrated metrology systems measure critical dimensions, device structures, topography and various thin film properties, including three-dimensional features and film thickness, as well as optical, electrical and material properties. The Company’s process control solutions are deployed throughout the fabrication process, from front-end-of-line substrate manufacturing, to production of semiconductors and other devices, to three-dimensional wafer-level packaging applications. The Company’s automated systems primarily consist of automated metrology systems that are employed in semiconductor production environments.

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