Amkor Technology (NASDAQ:AMKR) versus Disco (OTCMKTS:DSCSY) Critical Analysis

Disco (OTCMKTS:DSCSY) and Amkor Technology (NASDAQ:AMKR) are both technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Insider and Institutional Ownership

0.0% of Disco shares are held by institutional investors. Comparatively, 42.8% of Amkor Technology shares are held by institutional investors. 26.4% of Amkor Technology 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.

Profitability

This table compares Disco and Amkor Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Disco	32.04%	27.68%	21.83%
Amkor Technology	8.30%	13.32%	6.85%

Volatility & Risk

Disco has a beta of 1.67, suggesting that its stock price is 67% more volatile than the S&P 500. Comparatively, Amkor Technology has a beta of 2.39, suggesting that its stock price is 139% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Disco and Amkor Technology, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Disco	0	0	1	1	3.50
Amkor Technology	1	5	5	0	2.36

Amkor Technology has a consensus price target of $62.50, indicating a potential upside of 90.43%. Given Amkor Technology’s higher possible upside, analysts clearly believe Amkor Technology is more favorable than Disco.

Dividends

Disco pays an annual dividend of $0.27 per share and has a dividend yield of 1.0%. Amkor Technology pays an annual dividend of $0.33 per share and has a dividend yield of 1.0%. Disco pays out 28.7% of its earnings in the form of a dividend. Amkor Technology pays out 13.3% 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. Amkor Technology has increased its dividend for 4 consecutive years.

Earnings and Valuation

This table compares Disco and Amkor Technology”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Disco	$2.90 billion	9.80	$894.45 million	$0.94	27.89
Amkor Technology	$6.71 billion	1.21	$373.89 million	$2.48	13.23

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

About Disco

Disco Corporation manufactures and sells precision cutting, grinding, and polishing machines in Japan and internationally. Its precision machines include dicing saws, laser saws, grinders, polishers, wafer mounters, die separators, surface planers, and waterjet saws. The company also offers precision processing tools, such as dicing blades, grinding wheels, and dry polishing wheels; and other products, such as accessory equipment. In addition, it is involved in the disassembly and recycling of precision cutting, grinding, and polishing machines, as well as provides training services for the maintenance and operation of its products. Further, the company leases precision machines; and purchases and sells used machines. Additionally, it manufactures precision diamond abrasive tools, as well as offers chargeable processing services. The company was founded in 1937 and is headquartered in Tokyo, Japan.

About Amkor Technology

Amkor Technology, Inc. provides outsourced semiconductor packaging and test services in the United States, Japan, Europe, the Middle East, Africa, and the Asia Pacific. It offers turnkey packaging and test services, including semiconductor wafer bump, wafer probe, wafer back-grind, package design, packaging, system-level and final test, and drop shipment services; flip chip scale package products for smartphones, tablets, and other mobile consumer electronic devices; flip chip stacked chip scale packages that are used to stack memory digital baseband, and as applications processors in mobile devices; flip-chip ball grid array packages for various networking, storage, computing, automotive, and consumer applications; and memory products for system memory or platform data storage. The company also provides wafer-level CSP packages for power management, transceivers, sensors, wireless charging, codecs, radar, and specialty silicon; wafer-level fan-out packages used in power management, transceivers, radar, and specialty silicon; silicon wafer integrated fan-out technology that replaces a laminate substrate with a thinner structure; leadframe packages for electronic devices and mixed-signal applications; and substrate-based wirebond packages used to connect a die to a substrate. In addition, it offers micro-electro-mechanical systems packages that are miniaturized mechanical and electromechanical devices; and advanced system-in-package modules used in radio frequency and front end modules, basebands, connectivity, fingerprint sensors, display and touch screen drivers, sensors and MEMS, and NAND memory and solid-state drives. Further, the company provides wafer, package, and system level test services, as well as burn-in test and test development services. It serves integrated device manufacturers, fabless semiconductor companies, original equipment manufacturers, and contract foundries. The company was founded in 1968 and is headquartered in Tempe, Arizona.