Critical Review: Axcelis Technologies (ACLS) & IRIDEX (IRIX)

Axcelis Technologies (NASDAQ: ACLS) and IRIDEX (NASDAQ:IRIX) 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 analyst recommendations, dividends, profitability, earnings, institutional ownership, valuation and risk.

Volatility and Risk

Axcelis Technologies has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500. Comparatively, IRIDEX has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500.

Profitability

This table compares Axcelis Technologies and IRIDEX’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Axcelis Technologies 30.92% 18.64% 12.79%
IRIDEX -30.93% -35.98% -28.84%

Institutional and Insider Ownership

89.1% of Axcelis Technologies shares are owned by institutional investors. Comparatively, 48.2% of IRIDEX shares are owned by institutional investors. 5.7% of Axcelis Technologies shares are owned by insiders. Comparatively, 5.0% of IRIDEX shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Axcelis Technologies and IRIDEX’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Axcelis Technologies $410.56 million 1.82 $126.95 million $1.48 15.74
IRIDEX $41.59 million 1.62 -$12.86 million ($1.11) -5.22

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

Analyst Ratings

This is a summary of recent ratings and price targets for Axcelis Technologies and IRIDEX, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Axcelis Technologies 0 1 4 0 2.80
IRIDEX 0 0 1 0 3.00

Axcelis Technologies currently has a consensus target price of $31.80, suggesting a potential upside of 36.48%. IRIDEX has a consensus target price of $13.00, suggesting a potential upside of 124.53%. Given IRIDEX’s stronger consensus rating and higher possible upside, analysts plainly believe IRIDEX is more favorable than Axcelis Technologies.

Summary

Axcelis Technologies beats IRIDEX on 10 of the 13 factors compared between the two stocks.

About Axcelis Technologies

Axcelis Technologies, Inc. designs, manufactures, and services ion implantation and other processing equipment used in the fabrication of semiconductor chips worldwide. The company offers a line of high energy, high current, and medium current implanters for various application requirements. It also provides dry strip equipment, curing systems, and thermal processing systems. In addition, the company offers aftermarket lifecycle products and services, including used tools, spare parts, equipment upgrades, maintenance services, and customer training. It sells its equipment and services to semiconductor chip manufacturers through its direct sales force. The company was founded in 1995 and is headquartered in Beverly, Massachusetts.

About IRIDEX

IRIDEX Corporation provides therapeutic based laser systems, delivery devices, and consumable instrumentation to treat sight-threatening eye diseases in ophthalmology. The company offers laser consoles, such as Cyclo G6 laser system used for the treatment of glaucoma; IQ 532 and IQ 577 laser systems, which are used for the treatment of diabetic macular edema and other retinal diseases; and OcuLight TX, OcuLight SL, OcuLight SLx, OcuLight GL, and OcuLight GLx laser systems, which are used to treat proliferative diabetic retinopathy, macular holes, retinal tears, and detachments. It also provides delivery devices, including TxCell scanning laser delivery system that allows the physicians to perform multi-spot pattern scanning; Slit Lamp Adapter, which allows the physicians to utilize a standard slit lamp in diagnosis and treatment procedures; and TruFocus laser indirect ophthalmoscopes for use in procedures to treat peripheral retinal disorders. In addition, the company offers MicroPulse P3 Probe, which is used with its Cylco G6 laser system that delivers laser to treat glaucoma; G-Probe, which is used in procedures to treat uncontrolled glaucoma; G-Probe Illuminate that is used in procedures to treat refractory glaucoma; and EndoProbe family of products used in vitrectomy procedures. It serves ophthalmologists, research and teaching hospitals, government installations, surgical centers, hospitals, and office clinics. IRIDEX Corporation markets its products through direct and independent sales force in the United States, as well as through independent distributors internationally. The company was formerly known as IRIS Medical Instruments, Inc. and changed its name to IRIDEX Corporation in November 1995. IRIDEX Corporation was founded in 1989 and is headquartered in Mountain View, California.

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