Critical Contrast: Universal Display (NASDAQ:OLED) versus Nitto Denko (OTCMKTS:NDEKY)

Nitto Denko (OTCMKTS:NDEKY) and Universal Display (NASDAQ:OLED) are both technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, valuation, risk, dividends and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Nitto Denko and Universal Display, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nitto Denko	0	1	0	0	2.00
Universal Display	1	4	3	0	2.25

Universal Display has a consensus target price of $116.33, indicating a potential upside of 50.44%. Given Universal Display’s stronger consensus rating and higher possible upside, analysts plainly believe Universal Display is more favorable than Nitto Denko.

Dividends

Nitto Denko pays an annual dividend of $0.22 per share and has a dividend yield of 1.0%. Universal Display pays an annual dividend of $2.00 per share and has a dividend yield of 2.6%. Nitto Denko pays out 16.8% of its earnings in the form of a dividend. Universal Display pays out 48.4% 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. Universal Display has raised its dividend for 8 consecutive years. Universal Display is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Nitto Denko and Universal Display”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nitto Denko	$6.83 billion	2.18	$881.09 million	$1.31	16.75
Universal Display	$650.61 million	5.46	$242.07 million	$4.13	18.72

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

Institutional & Insider Ownership

78.2% of Universal Display shares are owned by institutional investors. 2.2% of Universal Display shares are owned by company 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 Nitto Denko and Universal Display’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nitto Denko	12.94%	12.13%	9.66%
Universal Display	32.24%	11.35%	10.17%

Risk & Volatility

Nitto Denko has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500. Comparatively, Universal Display has a beta of 1.56, indicating that its stock price is 56% more volatile than the S&P 500.

Summary

Universal Display beats Nitto Denko on 13 of the 17 factors compared between the two stocks.

About Nitto Denko

Nitto Denko Corporation primarily engages in the adhesive tapes business in Japan, the Americas, Europe, Asia, and Oceania. It provides double sided tapes, surface protective films, sealing materials, masking tapes, membranes, FPD/touch panel related products, gasket materials, semiconductor manufacturing process products, flexible printed circuit boards, porous films/breathable materials, and packaging tapes. The company also offers functional thermal transfer systems, such as labels, barcode label printers, and label printing software; tapes for electrical and electronic equipment; dust removal products for clean rooms; fluoroplastic sheets and tapes, and fluoroplastic porous films; and materials for housing and construction. In addition, it provides medical products, including transdermal therapeutic systems, athletic tapes, medical adhesive tapes for wearable devices and body sensors, adhesive tapes, and particles for nucleic acid synthesis. The company offers its products to automotive and transportation, housing/housing equipment, infrastructure, material, home appliance and electrical, display, electronic device, medical, packaging, and consumer/personal care industries. Nitto Denko Corporation was incorporated in 1918 and is headquartered in Osaka, Japan.

About Universal Display

Universal Display Corporation engages in the research, development, and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications in the United States and internationally. The company offers PHOLED technologies and materials for displays and lighting products under the UniversalPHOLED brand. It is also involved in the research, development, and commercialization of other OLED device and manufacturing technologies, including FOLED that are flexible OLEDs for the fabrication of OLEDs on flexible substrates; and OVJP, an organic vapor jet printing technology. In addition, the company provides technology development and support services, including third-party collaboration and support to third parties for the commercialization of their OLED products; and contract research services in the areas of chemical synthesis research, development, and commercialization for non-OLED applications, as well as engages in the intellectual property and technology licensing activities. Universal Display Corporation was founded in 1985 and is headquartered in Ewing, New Jersey.