Comparing Garmin (NYSE:GRMN) and KLA (NASDAQ:KLAC)

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

Analyst Ratings

This is a summary of current recommendations and price targets for Garmin and KLA, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Garmin	0	4	2	1	2.57
KLA	0	10	20	0	2.67

Garmin presently has a consensus target price of $269.40, indicating a potential upside of 15.61%. KLA has a consensus target price of $351.26, indicating a potential upside of 40.84%. Given KLA’s stronger consensus rating and higher probable upside, analysts clearly believe KLA is more favorable than Garmin.

Dividends

Garmin pays an annual dividend of $4.20 per share and has a dividend yield of 1.8%. KLA pays an annual dividend of $0.92 per share and has a dividend yield of 0.4%. Garmin pays out 46.8% of its earnings in the form of a dividend. KLA pays out 26.1% 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. Garmin has increased its dividend for 8 consecutive years and KLA has increased its dividend for 16 consecutive years.

Institutional & Insider Ownership

81.6% of Garmin shares are held by institutional investors. Comparatively, 86.7% of KLA shares are held by institutional investors. 15.4% of Garmin shares are held by company insiders. Comparatively, 91.5% of KLA shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Garmin and KLA’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Garmin	23.26%	20.07%	16.34%
KLA	35.66%	91.89%	29.21%

Earnings and Valuation

This table compares Garmin and KLA”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Garmin	$7.46 billion	6.02	$1.66 billion	$8.97	25.98
KLA	$12.16 billion	26.80	$4.06 billion	$3.53	70.65

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

Volatility & Risk

Garmin has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500. Comparatively, KLA has a beta of 1.5, indicating that its share price is 50% more volatile than the S&P 500.

Summary

KLA beats Garmin on 15 of the 18 factors compared between the two stocks.

About Garmin

Garmin Ltd. designs, develops, manufactures, markets, and distributes a range of wireless devices worldwide. Its Fitness segment offers running and multi-sport watches; cycling products; smartwatch devices; scales and monitors; and fitness accessories. This segment also provides Garmin Connect and Garmin Connect Mobile, which are web and mobile platforms where users can track and analyze their fitness, activities and workouts, and wellness data; and Connect IQ, an application development platform. The company's Outdoor segment offers adventure watches, outdoor handhelds and satellite communicators, golf devices, consumer automotive devices, and dog devices, as well as InReach and Gramin response communication device. Its Aviation segment designs, manufactures, and markets various aircraft avionics solutions, including integrated flight decks, electronic flight displays and instrumentation, navigation and communication products, automatic flight control systems and safety-enhancing technologies, audio control systems, engine indication systems, traffic awareness and avoidance solutions, ADS-B and transponders, weather information and avoidance solutions, datalink and connectivity solutions, and various services. The company's Marine segment provides chartplotters and multi-function displays, cartography products, fishfinders, sonar products, autopilot systems, radars, compliant instrument displays and sensors, VHF communication radios, handhelds and wearable devices, sailing products, audio products and accessories, digital switching products, and trolling motors. Its Auto segment offers embedded domain controllers and infotainment units; and software, map database, cameras, wearables, and automotive solutions. The company sells its products through independent retailers, dealers, distributors, installation and repair shops, and original equipment manufacturers, as well as online webshop. Garmin Ltd. was founded in 1989 and is based in Schaffhausen, Switzerland.

About KLA

KLA Corporation, together with its subsidiaries, engages in the design, manufacture, and marketing of process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide. It operates through three segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection. The company offers inspection and review tools to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and unpatterned wafers; metrology systems that are used to measure pattern dimensions, film thickness, film stress, layer-to-layer alignment, pattern placement, surface topography, and electro-optical properties for wafers; chemical process control equipment; wired and wireless sensor wafers and reticles; wafer defect inspection, review, and metrology systems; reticle inspection and metrology systems; and semiconductor software solutions that provide run-time process control, defect excursion identification, process corrections, and defect classification to accelerate yield learning rates and reduce production risk. It also provides etch, plasma dicing, deposition, and other wafer processing technologies and solutions for the semiconductor and microelectronics industry. In addition, the company offers direct imaging, inspection, optical shaping, inkjet and additive printing, UV laser drilling, and computer-aided manufacturing and engineering solutions for the PCB market; inspection and electrical testing systems to identify and classify defects, as well as systems to repair defects for the display market; and inspection and metrology systems for quality control and yield improvement in advanced and traditional semiconductor packaging markets. The company was formerly known as KLA-Tencor Corporation and changed its name to KLA Corporation in July 2019. KLA Corporation was incorporated in 1975 and is headquartered in Milpitas, California.