Critical Review: Disco (DSCSY) vs. Its Competitors

Disco (OTCMKTS:DSCSY) is one of 220 publicly-traded companies in the “Semiconductors & Semiconductor Equipment” industry, but how does it compare to its competitors? We will compare Disco to related businesses based on the strength of its earnings, risk, analyst recommendations, profitability, dividends, institutional ownership and valuation.

Risk & Volatility

Disco has a beta of 1.55, meaning that its share price is 55% more volatile than the S&P 500. Comparatively, Disco’s competitors have a beta of 2.00, meaning that their average share price is 100% more volatile than the S&P 500.

Institutional & Insider Ownership

0.0% of Disco shares are held by institutional investors. Comparatively, 54.8% of shares of all “Semiconductors & Semiconductor Equipment” companies are held by institutional investors. 12.1% of shares of all “Semiconductors & Semiconductor Equipment” companies 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.

Dividends

Disco pays an annual dividend of $0.28 per share and has a dividend yield of 0.7%. Disco pays out 32.2% of its earnings in the form of a dividend. As a group, “Semiconductors & Semiconductor Equipment” companies pay a dividend yield of 0.8% and pay out 35.6% of their earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current ratings for Disco and its competitors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Disco	0	1	1	0	2.50
Disco Competitors	3345	11938	24948	918	2.57

As a group, “Semiconductors & Semiconductor Equipment” companies have a potential upside of 11.53%. Given Disco’s competitors stronger consensus rating and higher probable upside, analysts plainly believe Disco has less favorable growth aspects than its competitors.

Valuation and Earnings

This table compares Disco and its competitors gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Disco	$2.90 billion	$894.45 million	46.79
Disco Competitors	$8.62 billion	$1.80 billion	52.94

Disco’s competitors have higher revenue and earnings than Disco. Disco is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Disco and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Disco	31.65%	26.03%	20.56%
Disco Competitors	-216.98%	-123.28%	-2.86%

Summary

Disco competitors beat Disco on 11 of the 15 factors compared.

About Disco

Disco Corporation manufactures and sells precision cutting, grinding, and polishing machines in Japan and internationally. Its precision machines include dicing saws, laser saws, grinders, polishers, wafer mounters, die separators, surface planers, and waterjet saws. The company also offers precision processing tools, such as dicing blades, grinding wheels, and dry polishing wheels; and other products, such as accessory equipment. In addition, it is involved in the disassembly and recycling of precision cutting, grinding, and polishing machines, as well as provides training services for the maintenance and operation of its products. Further, the company leases precision machines; and purchases and sells used machines. Additionally, it manufactures precision diamond abrasive tools, as well as offers chargeable processing services. The company was founded in 1937 and is headquartered in Tokyo, Japan.