Head to Head Contrast: Tokyo Electron (OTCMKTS:TOELY) vs. Timken (NYSE:TKR)

Timken (NYSE:TKR) and Tokyo Electron (OTCMKTS:TOELY) are both computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Dividends

Timken pays an annual dividend of $1.40 per share and has a dividend yield of 1.5%. Tokyo Electron pays an annual dividend of $1.21 per share and has a dividend yield of 1.0%. Timken pays out 33.1% of its earnings in the form of a dividend. Tokyo Electron pays out 30.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Timken has increased its dividend for 12 consecutive years. Timken is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Timken and Tokyo Electron, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Timken	0	7	4	0	2.36
Tokyo Electron	0	0	0	1	4.00

Timken currently has a consensus target price of $83.20, indicating a potential downside of 8.12%. Given Timken’s higher possible upside, equities analysts clearly believe Timken is more favorable than Tokyo Electron.

Insider and Institutional Ownership

89.1% of Timken shares are held by institutional investors. Comparatively, 1.3% of Tokyo Electron shares are held by institutional investors. 8.7% of Timken shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Timken and Tokyo Electron”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Timken	$4.57 billion	1.38	$352.70 million	$4.23	21.41
Tokyo Electron	$15.97 billion	6.77	$3.59 billion	$3.94	29.78

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

Risk and Volatility

Timken has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500. Comparatively, Tokyo Electron has a beta of 1.88, indicating that its stock price is 88% more volatile than the S&P 500.

Profitability

This table compares Timken and Tokyo Electron’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Timken	6.54%	11.88%	5.65%
Tokyo Electron	21.74%	28.36%	20.73%

Summary

Tokyo Electron beats Timken on 11 of the 18 factors compared between the two stocks.

About Timken

The Timken Company designs, manufactures, and sells engineered bearings and industrial motion products, and related services in the United States and internationally. The company's Engineered Bearings segment provides various bearing products, including tapered, spherical, and cylindrical roller bearings; plain bearings, metal-polymer bearings, and rod end bearings; radial, angular, and precision ball bearings; thrust and specialty ball bearings; journal bearings; and housed or mounted bearings. This segment serves wind energy, agriculture, construction, food and beverage, metals and mining, automotive and truck, aerospace, rail, and other industries under the Timken, GGB, and Fafnir brands. Its Industrial Motion segment offers a portfolio of engineered products comprising industrial drives, automatic lubrication systems, linear motion products and systems, chains, belts, seals, couplings, filtration systems, and industrial clutches and brakes. It also provides industrial drivetrain and bearing repairing services. This segment serves a range of industries, such as solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical, and others under the Philadelphia Gear, Cone Drive, Rollon, Nadella, Groeneveld, BEKA, Diamond, Drives, Timken Belts, Spinea, Des-Case, Lagersmit, Lovejoy, and PT Tech brands. The Timken Company was founded in 1899 and is headquartered in North Canton, Ohio.

About Tokyo Electron

Tokyo Electron Limited, together with its subsidiaries, develops, manufactures, and sells semiconductor and flat panel display (FPD) production equipment in Japan, Europe, North America, Taiwan, China, South Korea, Southeast Asia, and internationally. The company offers coaters/developers, etch systems, surface preparation systems, deposition systems, test systems, wafer bonders/debonders, wafer edge trimming, SiC epitaxial CVD systems, gas cluster ion beam system, and cleaning systems. It also provides plasma etch/ash systems for use in the manufacture of FPDs, as well as inkjet printing systems for manufacturing OLED displays. In addition, the company offers delivery, facility management, and non-life insurance services; sells semiconductor products, board computer products, software, and other electronic components; sells and supports network/storage/middleware related solutions; and develops, manufactures, and sells magnetic annealing systems. Tokyo Electron Limited was incorporated in 1951 and is headquartered in Tokyo, Japan.