Analyzing GlobalFoundries (NASDAQ:GFS) & Ultra Clean (NASDAQ:UCTT)

Ultra Clean (NASDAQ:UCTT) and GlobalFoundries (NASDAQ:GFS) are both technology companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, earnings, institutional ownership, valuation and dividends.

Analyst Recommendations

This is a summary of current ratings and price targets for Ultra Clean and GlobalFoundries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ultra Clean	1	0	5	1	2.86
GlobalFoundries	2	9	9	0	2.35

Ultra Clean currently has a consensus price target of $129.00, suggesting a potential upside of 82.62%. GlobalFoundries has a consensus price target of $74.32, suggesting a potential upside of 55.41%. Given Ultra Clean’s stronger consensus rating and higher probable upside, equities analysts clearly believe Ultra Clean is more favorable than GlobalFoundries.

Volatility and Risk

Ultra Clean has a beta of 1.88, indicating that its share price is 88% more volatile than the S&P 500. Comparatively, GlobalFoundries has a beta of 1.78, indicating that its share price is 78% more volatile than the S&P 500.

Profitability

This table compares Ultra Clean and GlobalFoundries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ultra Clean	-1.07%	6.99%	2.89%
GlobalFoundries	10.36%	6.69%	4.69%

Institutional & Insider Ownership

96.1% of Ultra Clean shares are owned by institutional investors. 1.8% of Ultra Clean shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Ultra Clean and GlobalFoundries”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ultra Clean	$2.05 billion	1.54	-$181.20 million	($0.52)	-135.85
GlobalFoundries	$6.79 billion	3.86	$885.00 million	$1.28	37.36

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

Summary

GlobalFoundries beats Ultra Clean on 8 of the 15 factors compared between the two stocks.

About Ultra Clean

Ultra Clean Holdings, Inc. develops and supplies critical subsystems, components and parts, and ultra-high purity cleaning and analytical services for the semiconductor industry in the United States and internationally. The company provides ultra-clean valves, high purity connectors, industrial process connectors and valves, pneumatic actuators, manifolds and safety solutions, hoses, pressure gauges, and gas line and component heaters; chemical delivery modules that deliver gases and reactive chemicals in a liquid or gaseous form from a centralized subsystem to the reaction chamber; and gas delivery systems, such as weldments, filters, mass flow controllers, regulators, pressure transducers and valves, component heaters, and an integrated electronic and/or pneumatic control system. It also offers various industrial and automation production equipment; fluid delivery systems consist of one or more chemical delivery units, including PFA tubing, filters, flow controllers, regulators, component heaters, and an integrated electronic and/or pneumatic control system; precision robotic systems; top-plate assemblies; frame assemblies; process modules, a subsystem of semiconductor manufacturing tools that process integrated circuits onto wafers; and other high-level assemblies. In addition, the company provides tool chamber parts cleaning and coating services; micro-contamination analysis services for tool parts, wafers and depositions, chemicals, cleanroom materials, deionized water, and airborne molecular contamination; and analytical verification services for process tool chamber part cleaning. It primarily serves original equipment manufacturing customers in the semiconductor capital equipment and semiconductor integrated device manufacturing industries, as well as display, consumer, medical, energy, industrial, and research equipment industries. The company was founded in 1991 and is headquartered in Hayward, California.

About GlobalFoundries

GlobalFoundries Inc., a semiconductor foundry, provides range of mainstream wafer fabrication services and technologies worldwide. It manufactures various semiconductor devices, including microprocessors, mobile application processors, baseband processors, network processors, radio frequency modems, microcontrollers, and power management units. GlobalFoundries Inc. has a strategic partnership with Efficient Computer to develop high-performance computer processors. The company was incorporated in 2008 and is headquartered in Malta, New York.