Comparing MKS (NASDAQ:MKSI) & KLA (NASDAQ:KLAC)

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

Risk & Volatility

KLA has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500. Comparatively, MKS has a beta of 1.94, indicating that its share price is 94% more volatile than the S&P 500.

Institutional & Insider Ownership

86.7% of KLA shares are owned by institutional investors. Comparatively, 99.8% of MKS shares are owned by institutional investors. 91.5% of KLA shares are owned by company insiders. Comparatively, 0.5% of MKS shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
KLA	35.76%	98.18%	29.24%
MKS	7.53%	20.85%	6.10%

Dividends

KLA pays an annual dividend of $7.60 per share and has a dividend yield of 0.5%. MKS pays an annual dividend of $1.00 per share and has a dividend yield of 0.4%. KLA pays out 22.1% of its earnings in the form of a dividend. MKS pays out 22.9% 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. KLA has increased its dividend for 16 consecutive years. KLA is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for KLA and MKS, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KLA	0	11	20	0	2.65
MKS	1	2	11	1	2.80

KLA presently has a consensus target price of $1,602.29, suggesting a potential upside of 3.51%. MKS has a consensus target price of $273.08, suggesting a potential upside of 12.42%. Given MKS’s stronger consensus rating and higher probable upside, analysts plainly believe MKS is more favorable than KLA.

Valuation and Earnings

This table compares KLA and MKS”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KLA	$12.16 billion	16.69	$4.06 billion	$34.37	45.04
MKS	$3.93 billion	4.16	$295.00 million	$4.37	55.58

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

Summary

KLA beats MKS on 12 of the 18 factors compared between the two stocks.

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.

About MKS

MKS Instruments, Inc. provides foundational technology solutions to semiconductor manufacturing, electronics and packaging, and specialty industrial applications in the United States, Germany, China, South Korea, and internationally. It operates through Vacuum Solutions Division (VSD), Photonics Solutions Division (PSD), and Material Solutions Division (MSD) segments. The VSD segment provides foundational technology solutions, including pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, electronic control technology, reactive gas generation and delivery, power generation and delivery, and vacuum technology. The PSD segment offers range of solutions, which include lasers, beam measurement and profiling, precision motion control, vibration isolation systems, photonics instruments, temperature sensing, opto-mechanical components, optical elements, systems for flexible PCB laser processing, and laser-based systems, as well as high density interconnect PCB and package manufacturing. The MSD segment develops, process, and manufactures technologies comprising advanced surface modification, electroless and electrolytic plating, and surface finishing for chemistry, equipment, software, and services markets, as well as high-technology applications. In addition, the company sells its products and services through direct sales, network of independent distributors, and sales representatives, as well as websites, including product catalogs. The company was incorporated in 1961 and is headquartered in Andover, Massachusetts.