Financial Analysis: Nanometrics (NANO) versus Cubic (CUB)

Nanometrics (NASDAQ: NANO) and Cubic (NYSE:CUB) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Profitability

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This table compares Nanometrics and Cubic’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nanometrics 11.68% 12.05% 10.20%
Cubic -1.21% -1.27% -0.63%

Earnings & Valuation

This table compares Nanometrics and Cubic’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nanometrics $258.62 million 2.36 $30.20 million $1.23 20.76
Cubic $1.49 billion 1.13 -$11.20 million ($0.41) -150.61

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Nanometrics and Cubic, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nanometrics 0 0 2 0 3.00
Cubic 0 1 4 0 2.80

Nanometrics presently has a consensus target price of $32.00, suggesting a potential upside of 25.34%. Cubic has a consensus target price of $61.00, suggesting a potential downside of 1.21%. Given Nanometrics’ stronger consensus rating and higher possible upside, research analysts clearly believe Nanometrics is more favorable than Cubic.

Institutional and Insider Ownership

85.7% of Nanometrics shares are held by institutional investors. Comparatively, 88.8% of Cubic shares are held by institutional investors. 6.7% of Nanometrics shares are held by insiders. Comparatively, 7.9% of Cubic shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Nanometrics has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500. Comparatively, Cubic has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Dividends

Cubic pays an annual dividend of $0.27 per share and has a dividend yield of 0.4%. Nanometrics does not pay a dividend. Cubic pays out -65.9% of its earnings in the form of a dividend.

Summary

Nanometrics beats Cubic on 10 of the 16 factors compared between the two stocks.

About Nanometrics

Nanometrics Incorporated provides process control metrology and inspection systems for use primarily in the fabrication of semiconductors and other solid-state devices worldwide. It offers automated metrology systems that provide optical critical dimension, thin film metrology, and wafer stress for transistor and interconnect metrology applications; and integrated metrology systems that are installed onto wafer processing equipment to provide near real-time measurements. The company's materials characterization products include systems that are used to monitor the physical, optical, electrical, and material characteristics of discrete electronic industry, opto-electronic, high brightness LED, solar photovoltaic, compound semiconductor, strained silicon, and silicon-on-insulator devices, including composition, crystal structure, layer thickness, dopant concentration, contamination, and electron mobility. It also offers NanoDiffract, a modeling, visualization, and analysis software that takes signals from the automated and integrated metrology systems providing critical dimension, thickness, and optical properties from in line measurements; SpectraProbe, a model-less fitting engine that enables fast time to solution for in-line excursion detection and control; NanoGen, an enterprise scale computing hardware system that is deployed to run the computing intensive analysis software; and NanoCentral, a fab based networking and server system providing connectivity and compute support to SpectraProbe and connected measurement systems. The company was founded in 1975 and is headquartered in Milpitas, California.

About Cubic

Cubic Corporation provides systems and solutions for the transportation and defense markets in the United States and internationally. It operates through three segments: Cubic Transportation Systems (CTS), Cubic Global Defense Systems (CGD Systems), and Cubic Global Defense Services (CGD Services). The CTS segment provides fare collection and revenue management devices, software, systems and multiagency, multimodal integration technologies, and operational services for transportation authorities and operators. It also delivers real-time passenger information systems for tracking and predicting vehicle arrival times; urban and inter-urban intelligent transportation and enforcement solutions; and technology and infrastructure maintenance services to city, regional, and national road and transportation agencies. The CGD Systems segment provides live and virtual military training systems, and secure communication systems and products to the U.S. Department of Defense, other U.S. government agencies, and allied nations. It offers instrumented range systems for fighter aircraft, armored vehicles and infantry force-on-force live training weapons effects simulations, laser-based tactical and communication systems, and precision gunnery solutions; secure communications products for intelligence, surveillance, ground combat, and search and rescue markets; and information capture, assessment, exploitation, and dissemination in a secure network-centric environment. The CGD Services segment provides live, virtual and constructive training, real-world mission rehearsal exercises, professional military education, intelligence support, information technology, information assurance and related cyber support, development of military doctrine, consequence management, infrastructure protection, and force protection services, as well as support to field operations and logistics. The company was founded in 1949 and is headquartered in San Diego, California.

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