Head to Head Review: STMicroelectronics (NYSE:STM) versus Nitto Denko (OTCMKTS:NDEKY)

Nitto Denko (OTCMKTS:NDEKY) and STMicroelectronics (NYSE:STM) are both large-cap technology companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, valuation, institutional ownership and risk.

Profitability

This table compares Nitto Denko and STMicroelectronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nitto Denko	13.15%	12.22%	9.76%
STMicroelectronics	3.80%	4.72%	3.34%

Risk & Volatility

Nitto Denko has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, STMicroelectronics has a beta of 1.96, meaning that its share price is 96% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Nitto Denko and STMicroelectronics, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nitto Denko	0	1	0	0	2.00
STMicroelectronics	0	5	7	0	2.58

STMicroelectronics has a consensus price target of $75.06, suggesting a potential upside of 60.55%. Given STMicroelectronics’ stronger consensus rating and higher probable upside, analysts plainly believe STMicroelectronics is more favorable than Nitto Denko.

Dividends

Nitto Denko pays an annual dividend of $0.22 per share and has a dividend yield of 1.0%. STMicroelectronics pays an annual dividend of $0.30 per share and has a dividend yield of 0.6%. Nitto Denko pays out 16.4% of its earnings in the form of a dividend. STMicroelectronics pays out 53.6% 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. Nitto Denko is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

5.1% of STMicroelectronics shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Nitto Denko and STMicroelectronics”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nitto Denko	$6.83 billion	2.12	$881.09 million	$1.34	15.92
STMicroelectronics	$13.67 billion	3.07	$166.00 million	$0.56	83.48

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

Summary

STMicroelectronics beats Nitto Denko on 8 of the 15 factors compared between the two stocks.

About Nitto Denko

Nitto Denko Corporation primarily engages in the adhesive tapes business in Japan, the Americas, Europe, Asia, and Oceania. It provides double sided tapes, surface protective films, sealing materials, masking tapes, membranes, FPD/touch panel related products, gasket materials, semiconductor manufacturing process products, flexible printed circuit boards, porous films/breathable materials, and packaging tapes. The company also offers functional thermal transfer systems, such as labels, barcode label printers, and label printing software; tapes for electrical and electronic equipment; dust removal products for clean rooms; fluoroplastic sheets and tapes, and fluoroplastic porous films; and materials for housing and construction. In addition, it provides medical products, including transdermal therapeutic systems, athletic tapes, medical adhesive tapes for wearable devices and body sensors, adhesive tapes, and particles for nucleic acid synthesis. The company offers its products to automotive and transportation, housing/housing equipment, infrastructure, material, home appliance and electrical, display, electronic device, medical, packaging, and consumer/personal care industries. Nitto Denko Corporation was incorporated in 1918 and is headquartered in Osaka, Japan.

About STMicroelectronics

STMicroelectronics N.V., together with its subsidiaries, designs, develops, manufactures, and sells semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The Automotive and Discrete Group segment offers automotive integrated circuits (ICs), and discrete and power transistor products. The Analog, MEMS and Sensors Group segment provides industrial application-specific integrated circuits (ASICs) and application-specific standard products (ASSPs); general purpose analog products; custom analog ICs; wireless charging solutions; galvanic isolated gate drivers; low and high voltage amplifiers, comparators, and current-sense amplifiers; MasterGaN, a solution that integrates a silicon driver and GaN power transistors in a single package; wireline and wireless connectivity ICs; touch screen controllers; micro-electro-mechanical systems (MEMS) products, including sensors or actuators; and optical sensing solutions. The Microcontrollers and Digital ICs Group segment offers general purpose and secure microcontrollers; and radio frequency (RF) products. It also offers application-specific standard products for analog, digital and mixed-signal applications. In addition, the company provides assembly and other services. It sells its products through distributors and retailers, as well as through sales representatives. The company serves automotive, industrial, personal electronics and communications equipment, and computers and peripherals markets. STMicroelectronics N.V. was incorporated in 1987 and is headquartered in Geneva, Switzerland.