Analyzing FormFactor (NASDAQ:FORM) and Teradyne (NASDAQ:TER)

FormFactor (NASDAQ:FORM) and Teradyne (NASDAQ:TER) are both technology companies, but which is the better business? We will contrast the two companies based on the strength of their risk, institutional ownership, earnings, dividends, valuation, analyst recommendations and profitability.

Profitability

This table compares FormFactor and Teradyne’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FormFactor	12.80%	13.44%	11.27%
Teradyne	25.77%	39.93%	27.67%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for FormFactor and Teradyne, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FormFactor	0	4	6	1	2.73
Teradyne	0	5	10	1	2.75

FormFactor presently has a consensus target price of $127.45, suggesting a potential upside of 7.67%. Teradyne has a consensus target price of $396.80, suggesting a potential upside of 6.82%. Given FormFactor’s higher probable upside, research analysts plainly believe FormFactor is more favorable than Teradyne.

Volatility & Risk

FormFactor has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, Teradyne has a beta of 1.78, meaning that its share price is 78% more volatile than the S&P 500.

Earnings & Valuation

This table compares FormFactor and Teradyne”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FormFactor	$902.23 million	10.23	$54.36 million	$1.46	81.08
Teradyne	$3.19 billion	18.21	$554.05 million	$7.29	50.96

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

Institutional and Insider Ownership

98.8% of FormFactor shares are owned by institutional investors. Comparatively, 99.8% of Teradyne shares are owned by institutional investors. 0.8% of FormFactor shares are owned by company insiders. Comparatively, 0.2% of Teradyne shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Teradyne beats FormFactor on 11 of the 14 factors compared between the two stocks.

About FormFactor

FormFactor, Inc. designs, manufactures, and sells probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems to semiconductor companies and scientific institutions in the United States, Taiwan, South Korea, China, Europe, Japan, Malaysia, Singapore, and internationally. It operates in two segments, Probe Cards and Systems. The company offers probe cards to test various semiconductor device types, including systems on a chip products, mobile application processors, microprocessors, microcontrollers, and graphic processors, as well as radio frequency, analog, mixed signal, image sensor, electro-optical, dynamic random access memory, NAND flash memory, and NOR flash memory devices, as well as computer processor devices; and analytical probes, which are used for a range of applications, including device characterization, electrical simulation model development, failure analysis, and prototype design debugging for universities, research institutions, semiconductor integrated device manufacturers, semiconductor foundries, and fabless semiconductor companies. It also provides probe systems for semiconductor design engineers to capture and analyze accurate data; surface metrology systems for the development, production, and quality control of semiconductor products; thermal subsystems, such as thermal chucks and other test systems used in probe stations and other applications; and precision cryogenic instruments, semiconductor tests, and measurement systems. In addition, the company offers on-site probe card maintenance and service training, seminars, and telephone support services. It markets and sells its products through direct sales force, manufacturers' representatives, and distributors. The company was incorporated in 1993 and is headquartered in Livermore, California.

About Teradyne

Teradyne, Inc. designs, develops, manufactures, and sells automated test systems and robotics products worldwide. It operates through four segments; Semiconductor Test, System Test, Robotics, and Wireless Test. The Semiconductor Test segment offers products and services for wafer level and device package testing of semiconductor devices in automotive, industrial, communications, consumer, smartphones, cloud, computer and electronic game, and other applications. This segment also provides FLEX test platform systems; J750 test system to address the volume semiconductor devices, including microcontrollers; Magnum platform that tests memory devices, such as flash memory and DRAM; and ETS platform for semiconductor manufacturers, and assembly and test subcontractors in the analog/mixed signal markets. It serves integrated device manufacturers that integrate the fabrication of silicon wafers into their business; fabless companies that outsource the manufacturing of silicon wafers; foundries; and semiconductor assembly and test providers. The System Test segment offers defense/aerospace test instrumentation and systems; storage and system level test systems; and circuit-board test and inspection systems. The Wireless Test segment provides wireless test solutions for silicon validation, wireless module manufacturing, and wireless end device manufacturing under the LitePoint brand. This segment also offers IQxel-MX and IQxel-MW7G series products for edge measurement performance in the manufacturing of connectivity products; IQxstream-5G and IQgig-5G family products to support 4G and 5G technologies; and IQgig-UWB+ for certification and manufacturing test support for ultra wideband products. The Robotics segment provides collaborative robotic arms, autonomous mobile robots, and advanced robotic control software for manufacturing, logistics, and industrial customers. The company was incorporated in 1960 and is headquartered in North Reading, Massachusetts.