Cohu (NASDAQ: COHU) and PDF Solutions (NASDAQ:PDFS) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, risk, analyst recommendations, profitability, valuation and dividends.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Cohu and PDF Solutions, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cohu 0 1 3 0 2.75
PDF Solutions 0 2 1 0 2.33

Cohu currently has a consensus price target of $23.75, suggesting a potential upside of 4.17%. PDF Solutions has a consensus price target of $23.33, suggesting a potential upside of 60.59%. Given PDF Solutions’ higher possible upside, analysts plainly believe PDF Solutions is more favorable than Cohu.

Volatility & Risk

Cohu has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500. Comparatively, PDF Solutions has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500.

Institutional & Insider Ownership

83.9% of Cohu shares are owned by institutional investors. Comparatively, 82.5% of PDF Solutions shares are owned by institutional investors. 6.0% of Cohu shares are owned by insiders. Comparatively, 16.2% of PDF Solutions shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Cohu pays an annual dividend of $0.24 per share and has a dividend yield of 1.1%. PDF Solutions does not pay a dividend. Cohu pays out 34.8% of its earnings in the form of a dividend.

Profitability

This table compares Cohu and PDF Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cohu 6.21% 11.59% 7.76%
PDF Solutions 5.29% 2.78% 2.49%

Valuation and Earnings

This table compares Cohu and PDF Solutions’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cohu $314.92 million 2.02 $37.41 million $0.69 33.04
PDF Solutions $104.27 million 4.51 $9.44 million $0.18 80.72

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

Summary

Cohu beats PDF Solutions on 10 of the 16 factors compared between the two stocks.

Cohu Company Profile

Cohu, Inc. is a supplier of semiconductor test and inspection handlers, micro-electro mechanical system (MEMS) test modules, test contactors and thermal sub-systems used by global semiconductor manufacturers and test subcontractors. It develops, manufactures, sells and services a line of equipment capable of handling a range of integrated circuits and light-emitting diodes. It operates through semiconductor equipment segment. It offers products for the pick-and-place, gravity-feed, test-in-strip and turret handling, MEMS, burn-in and system-level test markets. It sells various products, including Delta MATRiX, Delta Pyramid, Delta Eclipse, Delta LinX, Rasco SO1000, Rasco SO2000, Rasco Saturn and Jupiter, Rasco Jaguar, Ismeca NY32, Ismeca NY20 and Delta Fusion HD. Its manufacturing operations are located in Malacca, Malaysia (handlers); Poway, California (thermal subsystems); Laguna, the Philippines (kits and contactors); Kolbermoor, Germany (handlers), and Osaka, Japan (contactors).

PDF Solutions Company Profile

PDF Solutions, Inc. is a provider of infrastructure technologies and services for integrated circuits (IC). The Company’s technologies and services focus on the IC manufacturing process life cycle. It operates in the segment of licensing and implementation of yield improvement solutions for integrated circuit manufacturers. The Company’s solutions combine software, test chips, an electrical wafer test system, methodologies and professional services. The Company has developed solutions for yield simulation, analysis, loss detection, and improvement. Its characterization vehicle infrastructure (CVi) enables customers to electrically characterize the manufacturing process, and establish fail-rate information needed to calibrate manufacturing yield models and prioritize yield improvement activities. Its Exensio YieldAware solution combines software and services to enable customers to collect and combine product test data and equipment signals during production.

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