Analyzing Cohu (NASDAQ:COHU) & Veeco Instruments (NASDAQ:VECO)

Cohu (NASDAQ:COHU) and Veeco Instruments (NASDAQ:VECO) are both small-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, risk, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Risk & Volatility

Cohu has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500. Comparatively, Veeco Instruments has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500.

Insider & Institutional Ownership

94.7% of Cohu shares are held by institutional investors. Comparatively, 98.5% of Veeco Instruments shares are held by institutional investors. 2.9% of Cohu shares are held by company insiders. Comparatively, 2.4% of Veeco Instruments shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Cohu and Veeco Instruments, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cohu	1	1	4	0	2.50
Veeco Instruments	0	2	4	0	2.67

Cohu presently has a consensus price target of $27.1667, suggesting a potential upside of 38.96%. Veeco Instruments has a consensus price target of $27.3333, suggesting a potential upside of 19.15%. Given Cohu’s higher probable upside, analysts plainly believe Cohu is more favorable than Veeco Instruments.

Profitability

This table compares Cohu and Veeco Instruments’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cohu	-22.11%	-3.74%	-3.17%
Veeco Instruments	8.65%	7.57%	4.64%

Earnings and Valuation

This table compares Cohu and Veeco Instruments”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cohu	$401.78 million	2.27	-$69.82 million	($1.87)	-10.45
Veeco Instruments	$717.30 million	1.92	$73.71 million	$1.07	21.44

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

Summary

Veeco Instruments beats Cohu on 9 of the 13 factors compared between the two stocks.

About Cohu

Cohu, Inc., through its subsidiaries, provides semiconductor test equipment and services in China, the United States, Taiwan, Malaysia, the Philippines, and internationally. The company supplies semiconductor test and inspection handlers, micro-electromechanical system (MEMS) test modules, test contactors, thermal sub-systems, and semiconductor automated test equipment for semiconductor manufacturers and test subcontractors. It also provides semiconductor automated test equipment for wafer level and device package testing; various test handlers, including pick-and-place, turret, gravity, strip, and MEMS and thermal sub-systems; interface products comprising test contactors, and probe heads and pins; spares and kits; various parts and labor warranties on test and handling systems, and instruments; and training on the maintenance and operation of its systems, as well as application, data management software, and consulting services on its products. In addition, the company offers data analytics product that includes DI-Core, a software suite used to optimize Cohu equipment performance, which provides real-time online performance monitoring and process control. It markets its products through direct sales force and independent sales representatives. The company was formerly known as Cohu Electronics, Inc. and changed its name to Cohu, Inc. in 1972. The company was incorporated in 1947 and is headquartered in Poway, California.

About Veeco Instruments

Veeco Instruments Inc., together with its subsidiaries, develops, manufactures, sells, and supports semiconductor and thin film process equipment primarily to make electronic devices in the United States, Europe, the Middle East, and Africa, China, Rest of the Asia-Pacific, and internationally. The company offers laser annealing, ion beam deposition and etch, metal organic chemical vapor deposition, single wafer wet processing and surface preparation, molecular beam epitaxy, advanced packaging lithography, atomic layer deposition, and other deposition systems. Its process equipment systems are used in the production of a range of microelectronic components, including logic, dynamic random-access memory, photonics devices, power electronics, radio frequency filters and amplifiers, magnetic heads for hard disk drives, and other semiconductor devices. In addition, the company markets and sells its products to integrated device manufacturers and foundries; outsourced semiconductor assembly and test companies; and hard disk drive and photonics manufacturers, as well as research centers and universities. Veeco Instruments Inc. was founded in 1945 and is headquartered in Plainview, New York.