Reviewing Brooks Automation (BRKS) and Lam Research (LRCX)

Brooks Automation (NASDAQ: BRKS) and Lam Research (NASDAQ:LRCX) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, dividends, earnings and profitability.

Insider & Institutional Ownership

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90.2% of Brooks Automation shares are held by institutional investors. Comparatively, 90.4% of Lam Research shares are held by institutional investors. 2.4% of Brooks Automation shares are held by insiders. Comparatively, 0.4% of Lam Research shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Brooks Automation and Lam Research’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Brooks Automation $692.89 million 2.76 $62.61 million $1.24 21.89
Lam Research $8.01 billion 4.19 $1.70 billion $9.98 20.64

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

Profitability

This table compares Brooks Automation and Lam Research’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Brooks Automation 9.03% 14.43% 10.72%
Lam Research 17.60% 36.08% 20.19%

Dividends

Brooks Automation pays an annual dividend of $0.40 per share and has a dividend yield of 1.5%. Lam Research pays an annual dividend of $2.00 per share and has a dividend yield of 1.0%. Brooks Automation pays out 32.3% of its earnings in the form of a dividend. Lam Research pays out 20.0% 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.

Volatility & Risk

Brooks Automation has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500. Comparatively, Lam Research has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Brooks Automation and Lam Research, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brooks Automation 0 2 5 0 2.71
Lam Research 0 1 23 0 2.96

Brooks Automation currently has a consensus price target of $33.57, suggesting a potential upside of 23.70%. Lam Research has a consensus price target of $245.39, suggesting a potential upside of 19.11%. Given Brooks Automation’s higher possible upside, analysts plainly believe Brooks Automation is more favorable than Lam Research.

Summary

Lam Research beats Brooks Automation on 12 of the 16 factors compared between the two stocks.

Brooks Automation Company Profile

Brooks Automation, Inc. provides automation and cryogenic solutions for various applications and markets. It operates in two segments, Brooks Semiconductor Solutions Group and Brooks Life Science Systems. The Brooks Semiconductor Solutions Group segment offers critical automated transport, vacuum, and contamination controls solutions and services. Its products include atmospheric and vacuum robots, robotic modules, and tool automation systems that offer precision handling and clean wafer environments; automated cleaning and inspection systems for wafer carriers, as well as reticle pod cleaners and stockers; and vacuum pumping and thermal management solutions for critical process vacuum applications. This segment also offers repair, diagnostic, and installation services, as well as spare parts and productivity enhancement upgrade services. The Brooks Life Science Systems segment provides automated cold storage systems; consumables, including various formats of racks, tubes, caps, plates, and foils; and instruments used for labeling, bar coding, capping, decapping, auditing, sealing, peeling, and piercing tubes and plates. It also provides sample management services, such as on-site and off-site sample storage, cold chain logistics, sample relocation, bio-processing, disaster recovery, and business continuity, as well as project management and consulting. In addition, this segment offers sample intelligence software solutions and customer technology integration; and laboratory work flow scheduling for life science tools and instrument work cells, sample inventory and logistics, environmental and temperature monitoring, and clinical trial and consent management, as well as planning, data management, virtualization, and visualization services. The company serves semiconductor capital equipment and sample management markets for life sciences in approximately 50 countries. Brooks Automation, Inc. was founded in 1978 and is headquartered in Chelmsford, Massachusetts.

Lam Research Company Profile

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits worldwide. The company offers thin film deposition products, including SABRE electrochemical deposition products for copper damascene manufacturing; ALTUS systems to deposit conformal atomic layer films for tungsten metallization applications; VECTOR plasma-enhanced chemical vapor deposition (CVD) and atomic layer deposition systems to deposit oxides, nitrides, and carbides for hardmasks, multiple patterning films, anti-reflective layers, multi-layer stack films, and diffusion barriers; and Striker atomic layer deposition systems that deliver conformal dielectric films for spacer-based patterning and liner applications in various advanced memory and logic structures. Its thin film deposition products also comprise SPEED high-density plasma CVD products for applications in shallow trench isolation, pre-metal dielectrics, inter-layer dielectrics, inter-metal dielectrics, and passivation layers; and SOLA ultraviolet thermal processing products for treatment of back-end-of-line (BEOL) low-k dielectric films and front-end-of-line silicon nitride strained films. In addition, the company offers plasma etch products, such as Kiyo that provide solutions for conductor etch applications; Versys metal products, which offer a platform for BEOL metal etch processes; Flex for dielectric etch applications; and Syndion to address various through-silicon via etch and complementary image sensor etch applications. Further, it provides single-wafer clean products comprising EOS, Da Vinci, DV-Prime, and SP series products for wet etch and clean applications in wafer-level packaging; and Coronus plasma-based bevel clean products to enhance die yield by removing particles, residues, and unwanted films from the wafer's edge, as well as legacy products. The company was founded in 1980 and is headquartered in Fremont, California.

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