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

Valuation and Earnings

This table compares MTS Systems and Nanometrics’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MTS Systems $787.96 million 1.15 $25.08 million $2.22 23.00
Nanometrics $258.62 million 2.30 $30.20 million $1.23 20.27

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for MTS Systems and Nanometrics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MTS Systems 0 0 2 0 3.00
Nanometrics 0 0 2 0 3.00

MTS Systems currently has a consensus target price of $70.00, indicating a potential upside of 37.12%. Nanometrics has a consensus target price of $32.00, indicating a potential upside of 28.36%. Given MTS Systems’ higher probable upside, equities research analysts plainly believe MTS Systems is more favorable than Nanometrics.

Risk and Volatility

MTS Systems has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500. Comparatively, Nanometrics has a beta of 1.51, meaning that its stock price is 51% more volatile than the S&P 500.

Profitability

This table compares MTS Systems and Nanometrics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MTS Systems 7.22% 9.33% 3.39%
Nanometrics 11.68% 12.05% 10.20%

Dividends

MTS Systems pays an annual dividend of $1.20 per share and has a dividend yield of 2.4%. Nanometrics does not pay a dividend. MTS Systems pays out 54.1% of its earnings in the form of a dividend.

Insider & Institutional Ownership

99.0% of MTS Systems shares are owned by institutional investors. Comparatively, 85.2% of Nanometrics shares are owned by institutional investors. 1.8% of MTS Systems shares are owned by insiders. Comparatively, 6.9% of Nanometrics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Nanometrics beats MTS Systems on 8 of the 14 factors compared between the two stocks.

MTS Systems Company Profile

MTS Systems Corporation supplies test systems and sensors in the Americas, Europe, and Asia. The company's Test segment offers road simulators and component test systems for durability testing; vehicle performance test systems; vehicle dynamics simulators; electrical motors and energy recovery systems; tire performance and rolling resistance measurement systems; and moving ground-plane systems and balances. It also provides systems for the physical characterization of material properties, including ceramics, composites, and steel; systems to test durability and performance of implants, prostheses, and other medical and dental materials and devices; products, systems, and software to perform static and fatigue testing of aircraft and space vehicles; products for blades, bearings, and wind turbines; structural engineering systems, such as static and dynamic testing; and seismic simulation tables. In addition, this segment offers installation, professional training, calibration and metrology, technical consulting, and onsite and factory repair and maintenance services, as well as various accessories and spare parts. It serves automobile, truck, motorcycle, motorsports vehicle, construction equipment, agricultural equipment, rail, and off-road vehicle manufacturers and their suppliers, as well as power generation, aerospace, bio-medical, wind energy, oil and gas, structural engineering, and other industries. The company's Sensors segment offers sensors for acceleration, position, vibration, motion, pressure, force, and sound measurement; and piezoelectric sensors and components for vibration, pressure, and force measurement. It serves automotive, aerospace, industrial, defense, and research and development markets. The company sells its products through direct sales and service organizations, and independent distributors, as well as through catalogs, Internet, etc. MTS Systems Corporation was founded in 1966 and is headquartered in Eden Prairie, Minnesota.

Nanometrics Company Profile

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.

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