Lam Research (LRCX) & W?rtsil? (WRTBY) Critical Review

Lam Research (NASDAQ: LRCX) and W?rtsil? (OTCMKTS:WRTBY) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, profitability, earnings, institutional ownership, valuation and risk.

Volatility and Risk

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Lam Research has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500. Comparatively, W?rtsil? has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Profitability

This table compares Lam Research and W?rtsil?’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lam Research 17.60% 36.08% 20.19%
W?rtsil? 7.88% 18.16% 7.40%

Dividends

Lam Research pays an annual dividend of $2.00 per share and has a dividend yield of 1.0%. W?rtsil? pays an annual dividend of $0.15 per share and has a dividend yield of 2.5%. Lam Research pays out 20.0% of its earnings in the form of a dividend. W?rtsil? pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

90.0% of Lam Research shares are owned by institutional investors. 0.4% of Lam Research shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Lam Research and W?rtsil?’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lam Research $8.01 billion 3.88 $1.70 billion $9.98 19.10
W?rtsil? $5.56 billion 3.19 $433.78 million $0.15 40.00

Lam Research has higher revenue and earnings than W?rtsil?. Lam Research is trading at a lower price-to-earnings ratio than W?rtsil?, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for Lam Research and W?rtsil?, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lam Research 0 0 23 0 3.00
W?rtsil? 0 0 0 0 N/A

Lam Research currently has a consensus target price of $246.55, suggesting a potential upside of 29.32%. Given Lam Research’s higher possible upside, equities research analysts plainly believe Lam Research is more favorable than W?rtsil?.

Summary

Lam Research beats W?rtsil? on 13 of the 15 factors compared between the two stocks.

About Lam Research

Lam Research Corporation is a supplier of wafer fabrication equipment and services to the semiconductor industry. The Company designs, manufactures, markets, refurbishes and services semiconductor processing systems that are used in the fabrication of integrated circuits (ICs). It operates through manufacturing and servicing of wafer processing semiconductor manufacturing equipment segment. Its products are designed to enable its customers build a range of devices that are used in a range of electronic products, including cell phones, tablets, computers, storage devices, and networking equipment. Its customer base includes semiconductor memory, foundry, and integrated device manufacturers (IDMs) that make products, such as dynamic random-access memory (DRAM), negative-AND (NAND) memory and logic devices. It offers a portfolio of products that are used in several areas of the semiconductor manufacturing process flow, including thin film deposition, plasma etch and single-wafer clean.

About W?rtsil?

Wärtsilä Oyj Abp provides technologies and lifecycle solutions for the marine and energy markets worldwide. The company offers gas, multi-fuel, and liquid fuel power plants; and seals, bearings, and related equipment for the hydropower and tidal, and a range of industrial sectors. It also provides ballast water management systems; seismic, rig tensioning, CNG, and high pressure air and gas compressors; communication, and safety and security systems; and automation, dredge control and monitoring, integrated bridge control, and measurement and control technologies. It also provides electric propulsion and drives; power generation and distribution systems; navigation, automation, and communication systems; dynamic positioning, safety, and security solutions; and entertainment systems. In addition, the company offers dual fuel, diesel, and low-speed engines, as well as generating sets and auxiliary systems; architectural lighting, audio, broadcast, digital signage, dynamic lighting, and LED display systems; exhaust gas cleaning systems; single stage desalination systems and multi stage flash evaporators; and gas cargo handling, gas recovery, LNG, fuel gas handling, and tank control systems. Further, it provides inert gas systems; hybrid and integrated solutions; gears, propellers, propulsion control systems, rudders, thrusters, and waterjets; shaft generator and shore connection systems; centrifugal, deepwell, firefight, seawater lift, and gas fuel pumps, as well as pump room systems and valves; sonars and naval acoustics; and wet and dry products, as well as designs ferry, fishing, merchant, offshore, tug, and other vessels. Additionally, the company offers electrical and automation, 2 and 4-stroke engine, environmental, seal and bearing, hydro and tidal, industrial, propulsion, and other services. It serves merchant, offshore, cruise and ferry, special vessel, and navy segments. The company was founded in 1834 and is headquartered in Helsinki, Finland.

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