Analyzing United Microelectronics (NYSE:UMC) and Kulicke and Soffa Industries (NASDAQ:KLIC)

United Microelectronics (NYSE:UMC) and Kulicke and Soffa Industries (NASDAQ:KLIC) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, risk, profitability and valuation.

Profitability

This table compares United Microelectronics and Kulicke and Soffa Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Microelectronics	20.35%	12.78%	8.16%
Kulicke and Soffa Industries	-9.77%	-0.92%	-0.71%

Dividends

United Microelectronics pays an annual dividend of $0.35 per share and has a dividend yield of 5.8%. Kulicke and Soffa Industries pays an annual dividend of $0.82 per share and has a dividend yield of 1.9%. United Microelectronics pays out 60.3% of its earnings in the form of a dividend. Kulicke and Soffa Industries pays out 683.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. United Microelectronics is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

5.1% of United Microelectronics shares are held by institutional investors. Comparatively, 98.2% of Kulicke and Soffa Industries shares are held by institutional investors. 8.0% of United Microelectronics shares are held by company insiders. Comparatively, 3.4% of Kulicke and Soffa Industries shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for United Microelectronics and Kulicke and Soffa Industries, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Microelectronics	1	3	0	0	1.75
Kulicke and Soffa Industries	0	2	3	0	2.60

United Microelectronics currently has a consensus target price of $7.40, indicating a potential upside of 22.48%. Kulicke and Soffa Industries has a consensus target price of $52.40, indicating a potential upside of 20.77%. Given United Microelectronics’ higher probable upside, research analysts plainly believe United Microelectronics is more favorable than Kulicke and Soffa Industries.

Valuation and Earnings

This table compares United Microelectronics and Kulicke and Soffa Industries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Microelectronics	$7.09 billion	2.14	$1.44 billion	$0.58	10.42
Kulicke and Soffa Industries	$706.23 million	3.30	-$69.01 million	$0.12	361.58

United Microelectronics has higher revenue and earnings than Kulicke and Soffa Industries. United Microelectronics is trading at a lower price-to-earnings ratio than Kulicke and Soffa Industries, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

United Microelectronics has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500. Comparatively, Kulicke and Soffa Industries has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500.

Summary

United Microelectronics beats Kulicke and Soffa Industries on 11 of the 16 factors compared between the two stocks.

About United Microelectronics

United Microelectronics Corporation operates as a semiconductor wafer foundry in Taiwan, China, Hong Kong, Japan, Korea, the United States, Europe, and internationally. The company provides circuit design, mask tooling, wafer fabrication, and assembly and testing services. It serves fabless design companies and integrated device manufacturers. United Microelectronics Corporation was incorporated in 1980 and is headquartered in Hsinchu City, Taiwan.

About Kulicke and Soffa Industries

Kulicke and Soffa Industries, Inc. designs, manufactures, and sells capital equipment and tools used to assemble semiconductor devices. It operates through four segments: Ball Bonding Equipment, Wedge Bonding Equipment, Advanced Solutions, and Aftermarket Products and Services (APS). The company offers ball bonding equipment, wafer level bonding equipment, wedge bonding equipment; and advanced display, die-attach, and thermocompression systems and solutions, as well as tools, spares and services for equipment. It also services, maintains, repairs, and upgrades equipment. The company serves semiconductor device manufacturers, integrated device manufacturers, outsourced semiconductor assembly and test providers, other electronics manufacturers, industrial manufacturers, foundry service providers, and automotive electronics suppliers primarily in the United States and the Asia/Pacific region. The company was founded in 1951 and is headquartered in Fort Washington, Pennsylvania.