Advantest (OTCMKTS:ATEYY) & TE Connectivity (NYSE:TEL) Critical Comparison

Advantest (OTCMKTS:ATEYY) and TE Connectivity (NYSE:TEL) are both large-cap technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, profitability, risk and earnings.

Profitability

This table compares Advantest and TE Connectivity’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Advantest	37.15%	58.10%	38.75%
TE Connectivity	15.61%	24.59%	12.50%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Advantest and TE Connectivity, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advantest	0	2	0	1	2.67
TE Connectivity	0	6	8	1	2.67

TE Connectivity has a consensus price target of $251.15, suggesting a potential upside of 24.28%. Given TE Connectivity’s higher possible upside, analysts plainly believe TE Connectivity is more favorable than Advantest.

Dividends

Advantest pays an annual dividend of $0.26 per share and has a dividend yield of 0.1%. TE Connectivity pays an annual dividend of $3.12 per share and has a dividend yield of 1.5%. Advantest pays out 6.4% of its earnings in the form of a dividend. TE Connectivity pays out 30.6% 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. TE Connectivity has raised its dividend for 12 consecutive years. TE Connectivity is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Advantest and TE Connectivity”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advantest	$7.50 billion	20.48	$2.48 billion	$4.06	51.68
TE Connectivity	$17.26 billion	3.39	$1.84 billion	$10.20	19.81

Advantest has higher earnings, but lower revenue than TE Connectivity. TE Connectivity is trading at a lower price-to-earnings ratio than Advantest, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

0.0% of Advantest shares are held by institutional investors. Comparatively, 91.4% of TE Connectivity shares are held by institutional investors. 0.6% of TE Connectivity shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Advantest has a beta of 2.11, suggesting that its share price is 111% more volatile than the S&P 500. Comparatively, TE Connectivity has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500.

About Advantest

Advantest Corporation manufactures and sells semiconductors, component test system products, and mechatronics related products in Japan, the Americas, Europe, and Asia. The company operates through three segments: Semiconductor and Component Test System; Mechatronics Related Business; and Services, Support and Others. The Semiconductor and Component Test System segment provides customers with test system products for the semiconductor industry and the electronic parts industry, as well as offers test systems for SoC semiconductor devices, and test systems for memory semiconductors devices. The Mechatronics Related Business segment provides test handlers; mechatronic-applied products for handling semiconductor devices; and device interfaces, which serve as interfaces with the devices that are measured, as well as nano-technology related products. The Services, Support and Others segment provides test solutions of system level testing customer solutions for the semiconductor and modules, and support services. This segment is also involved in the sale of consumables and used products, and equipment lease and other businesses. It also engages in the research and development activities and provides maintenance and support services. The company was incorporated in 1946 and is headquartered in Tokyo, Japan.

About TE Connectivity

TE Connectivity Ltd., together with its subsidiaries, manufactures and sells connectivity and sensor solutions in Europe, the Middle East, Africa, the AsiaPacific, and the Americas. The company operates through three segments: Transportation Solutions, Industrial Solutions, and Communications Solutions. The Transportation Solutions segment provides terminals and connector systems and components, sensors, relays, antennas, and application tooling products for use in the automotive, commercial transportation, and sensor markets. The Industrial Solutions segment offers terminals and connector systems and components; and interventional medical components, relays, heat shrink tubing, and wires and cables for industrial equipment, aerospace, defense, marine, medical, and energy markets. The Communications Solutions segment supplies electronic components, such as terminals and connector systems and components, relays, heat shrink tubing, and antennas for the data and devices, and appliances markets. The company sells its products to approximately 140 countries primarily through direct sales to manufacturers, as well as through third-party distributors. The company was formerly known as Tyco Electronics Ltd. and changed its name to TE Connectivity Ltd. in March 2011. TE Connectivity Ltd. was founded in 1941 and is based in Schaffhausen, Switzerland.