Comparing ASML (NASDAQ:ASML) and MKS (NASDAQ:MKSI)

ASML (NASDAQ:ASML) and MKS (NASDAQ:MKSI) are both large-cap technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Institutional & Insider Ownership

26.1% of ASML shares are held by institutional investors. Comparatively, 99.8% of MKS shares are held by institutional investors. 0.6% of MKS shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

ASML pays an annual dividend of $7.12 per share and has a dividend yield of 0.5%. MKS pays an annual dividend of $1.00 per share and has a dividend yield of 0.4%. ASML pays out 17.5% of its earnings in the form of a dividend. MKS pays out 11.9% 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.

Analyst Recommendations

This is a breakdown of recent recommendations for ASML and MKS, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ASML	3	2	17	2	2.75
MKS	1	2	11	1	2.80

ASML presently has a consensus price target of $2,204.71, suggesting a potential upside of 43.68%. MKS has a consensus price target of $366.77, suggesting a potential upside of 62.29%. Given MKS’s stronger consensus rating and higher possible upside, analysts clearly believe MKS is more favorable than ASML.

Earnings and Valuation

This table compares ASML and MKS”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ASML	$39.47 billion	14.98	$10.87 billion	$40.62	37.77
MKS	$3.93 billion	3.89	$295.00 million	$8.43	26.81

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

Profitability

This table compares ASML and MKS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ASML	34.10%	64.24%	26.08%
MKS	12.64%	28.77%	9.51%

Risk and Volatility

ASML has a beta of 1.8, indicating that its share price is 80% more volatile than the S&P 500. Comparatively, MKS has a beta of 2.14, indicating that its share price is 114% more volatile than the S&P 500.

Summary

ASML beats MKS on 11 of the 17 factors compared between the two stocks.

About ASML

ASML Holding N.V. is a Netherlands-based technology company that develops and manufactures equipment used to produce semiconductor chips. Its systems are used by chipmakers to create the intricate patterns that form circuits on silicon wafers. The company’s products include extreme ultraviolet (EUV) and deep ultraviolet (DUV) lithography systems, along with metrology and inspection equipment, computational lithography software, and related services. ASML also supports customers with system maintenance, upgrades, and technical assistance.

About MKS

MKS Inc. develops technologies used to manufacture semiconductor devices and other advanced products. Its offerings include instruments, components, subsystems and systems that measure and control pressure, gas flow, gas composition, power and other process conditions. The company also provides laser and photonics technologies, motion-control solutions, and specialty chemicals and plating equipment. These products support semiconductor fabrication and packaging, electronics manufacturing, life sciences and a range of industrial applications.