Analyzing AXT (NASDAQ:AXTI) and Onto Innovation (NYSE:ONTO)

AXT (NASDAQ:AXTI) and Onto Innovation (NYSE:ONTO) are both technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Profitability

This table compares AXT and Onto Innovation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AXT	3.23%	0.96%	0.70%
Onto Innovation	11.84%	13.44%	10.30%

Earnings and Valuation

This table compares AXT and Onto Innovation”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AXT	$125.51 million	30.15	-$21.26 million	$0.02	2,885.00
Onto Innovation	$1.01 billion	11.91	$136.76 million	$2.66	91.75

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

Risk & Volatility

AXT has a beta of 1.92, indicating that its stock price is 92% more volatile than the S&P 500. Comparatively, Onto Innovation has a beta of 1.59, indicating that its stock price is 59% more volatile than the S&P 500.

Institutional & Insider Ownership

49.5% of AXT shares are held by institutional investors. Comparatively, 98.3% of Onto Innovation shares are held by institutional investors. 6.0% of AXT shares are held by company insiders. Comparatively, 0.5% of Onto Innovation 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 current ratings and target prices for AXT and Onto Innovation, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AXT	1	1	3	1	2.67
Onto Innovation	0	1	10	2	3.08

AXT currently has a consensus price target of $77.00, suggesting a potential upside of 33.45%. Onto Innovation has a consensus price target of $378.00, suggesting a potential upside of 54.89%. Given Onto Innovation’s stronger consensus rating and higher probable upside, analysts clearly believe Onto Innovation is more favorable than AXT.

Summary

Onto Innovation beats AXT on 11 of the 15 factors compared between the two stocks.

About AXT

AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. The company offers indium phosphide for use in data center connectivity using light/lasers, high-speed data transfer in data centers, 5G communications, fiber optic lasers and detectors, consumer devices, passive optical networks, silicon photonics, photonic integrated circuits, thermo-photovoltaics, RF amplifier and switching, infrared light-emitting diode (LEDS) motion control, lidar for robotics and autonomous vehicles, and infrared thermal imaging. It also provides semi-insulating gallium arsenide (GaAs) substrates for use in Wi-Fi and IoT devices, transistors, direct broadcast television, power amplifiers, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in LEDs, screen displays using micro-LEDs, printer head lasers and LEDs, 3-D sensing using VCSELs, data center communication using VCSELs, sensors for industrial robotics/near-infrared sensors, optical couplers, solar cells, night vision goggles, lidar for robotics and autonomous vehicles, and other lasers, as well as laser machining, cutting, and drilling. In addition, the company offers germanium substrates for use in multi-junction solar cells for satellites, optical sensors and detectors, terrestrial concentrated photo voltaic cells, infrared detectors, and carrier wafer for LED. Further, it provides 6N+ and 7N+ purified gallium, boron trioxide, gallium-magnesium alloy, pyrolytic boron nitride (pBN) crucibles, and pBN insulating parts. It sells its products through direct salesforce in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was incorporated in 1986 and is headquartered in Fremont, California.

About Onto Innovation

Onto Innovation Inc. engages in the design, development, manufacture, and support of process control tools that performs optical metrology. The company offers lithography systems and process control analytical software. It also offers process and yield management solutions, and device packaging and test facilities through standalone systems for optical metrology, macro-defect inspection, packaging lithography, and transparent and opaque thin film measurements. In addition, the company provides process control software portfolio that includes solutions for standalone tools, groups of tools, and enterprise-or factory-wide suites. Further, it engages in systems software, spare parts, and other services, as well as offers software licensing services. The company's products are used in semiconductor and advanced packaging device manufacturers; silicon wafer; light emitting diode; vertical-cavity surface-emitting laser; micro-electromechanical system; CMOS image sensor; power device; analog device; RF filter; data storage; and various industrial and scientific applications. Onto Innovation Inc. was founded in 1940 and is headquartered in Wilmington, Massachusetts.