Head to Head Analysis: NetApp (NASDAQ:NTAP) versus TDK (OTCMKTS:TTDKY)

TDK (OTCMKTS:TTDKY) and NetApp (NASDAQ:NTAP) are both large-cap technology companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, institutional ownership, earnings, analyst recommendations, dividends and profitability.

Institutional & Insider Ownership

92.2% of NetApp shares are held by institutional investors. 0.0% of TDK shares are held by company insiders. Comparatively, 0.4% of NetApp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for TDK and NetApp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TDK	0	1	0	1	3.00
NetApp	0	10	5	0	2.33

NetApp has a consensus price target of $177.25, suggesting a potential downside of 9.71%. Given NetApp’s higher possible upside, analysts plainly believe NetApp is more favorable than TDK.

Dividends

TDK pays an annual dividend of $0.16 per share and has a dividend yield of 0.9%. NetApp pays an annual dividend of $2.08 per share and has a dividend yield of 1.1%. TDK pays out 23.5% of its earnings in the form of a dividend. NetApp pays out 32.7% 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. NetApp has increased its dividend for 1 consecutive years. NetApp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

TDK has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500. Comparatively, NetApp has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500.

Earnings and Valuation

This table compares TDK and NetApp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TDK	$16.64 billion	2.19	$1.30 billion	$0.68	27.54
NetApp	$6.92 billion	5.56	$1.28 billion	$6.36	30.87

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

Profitability

This table compares TDK and NetApp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TDK	7.87%	9.55%	4.65%
NetApp	18.43%	117.23%	13.09%

Summary

NetApp beats TDK on 13 of the 18 factors compared between the two stocks.

About TDK

TDK Corporation, together with its subsidiaries, engages in manufacture and sale of electronic components in Japan, Europe, China, Asia, the Americas, and internationally. The company operates through Passive Components, Sensor Application Products, Magnetic Application Products, Energy Application Products, and Other segments. The Passive Components segment offers ceramic capacitors, aluminum electrolytic capacitors, film capacitors, high-frequency components, piezoelectric materials, and circuit protection components, as well as inductive devices, including ferrite cores, coils, and transformers. The Sensor Application Products segment provides temperature and pressure, magnetic, and MEMS sensors. The Magnetic Application Products segment offers hard disk drives (HDD) heads, HDD suspension assemblies, and magnets. The Energy Application Products segment provides energy devices comprising rechargeable batteries, and power supplies. The Other segment provides mechatronics production equipment and camera module micro actuators for smartphones and other products. The company also engages in engages in insurance and real estate agency businesses. The company was formerly known as Tokyo Denki Kagaku Kogyo K.K. and changed its name to TDK Corporation in 1983. TDK Corporation was founded in 1935 and is headquartered in Tokyo, Japan.

About NetApp

NetApp, Inc. provides cloud-led and data-centric services to manage and share data on-premises, and private and public clouds worldwide. It operates in two segments, Hybrid Cloud and Public Could. The company offers intelligent data management software, such as NetApp ONTAP, NetApp Snapshot, NetApp SnapCenter Backup Management, NetApp SnapMirror Data Replication, NetApp SnapLock Data Compliance, and storage infrastructure solutions, including NetApp All-Flash FAS series, NetApp Fabric Attached Storage, NetApp E/EF series, and NetApp StorageGRID. In addition, it provides cloud storage and data services comprising NetApp Cloud Volumes ONTAP, Azure NetApp Files, Amazon FSx for NetApp ONTAP, NetApp Cloud Volumes Service for Google Cloud, and cloud operations services, such as NetApp Cloud Insights, Spot by NetApp, and Instaclustr. Further, the company offers application-aware data management service under the NetApp Astra name; and professional and support services, such as strategic consulting, professional, managed, and support services. Additionally, it provides assessment, design, implementation, and migration services. The company serves the energy, financial service, government, technology, internet, life science, healthcare service, manufacturing, media, entertainment, animation, video postproduction, and markets through a direct sales force and an ecosystem of partners. NetApp, Inc. was incorporated in 1992 and is headquartered in San Jose, California.