Canaan (NASDAQ:CAN) and Applied Materials (NASDAQ:AMAT) Critical Comparison

Applied Materials (NASDAQ:AMAT) and Canaan (NASDAQ:CAN) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, dividends, valuation and analyst recommendations.

Insider & Institutional Ownership

80.6% of Applied Materials shares are owned by institutional investors. Comparatively, 70.1% of Canaan shares are owned by institutional investors. 0.3% of Applied Materials shares are owned by insiders. Comparatively, 0.3% of Canaan shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Applied Materials has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500. Comparatively, Canaan has a beta of 3.06, indicating that its share price is 206% more volatile than the S&P 500.

Profitability

This table compares Applied Materials and Canaan’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Applied Materials	26.41%	39.26%	21.92%
Canaan	-158.65%	-59.66%	-44.41%

Analyst Ratings

This is a summary of current ratings and recommmendations for Applied Materials and Canaan, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Materials	0	7	15	0	2.68
Canaan	0	1	4	0	2.80

Applied Materials presently has a consensus price target of $219.81, indicating a potential upside of 28.93%. Canaan has a consensus price target of $3.38, indicating a potential upside of 102.10%. Given Canaan’s stronger consensus rating and higher possible upside, analysts clearly believe Canaan is more favorable than Applied Materials.

Valuation and Earnings

This table compares Applied Materials and Canaan”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Materials	$27.18 billion	5.17	$7.18 billion	$8.61	19.80
Canaan	$189.34 million	2.67	-$414.15 million	($1.55)	-1.08

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

Summary

Applied Materials beats Canaan on 10 of the 13 factors compared between the two stocks.

About Applied Materials

Applied Materials, Inc. engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices. It operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. The company was incorporated in 1967 and is headquartered in Santa Clara, California.

About Canaan

Canaan Inc. engages in the research, design, and sale of integrated circuit (IC) final mining equipment products by integrating IC products for bitcoin mining and related components in the People's Republic of China. It is also involved in the assembly and distribution of mining equipment and spare parts. The company has operations in the United States, Australia, Kazakhstan, Hong Kong, Canada, Mainland China, Thailand, Sweden, and internationally. Canaan Inc. was founded in 2013 and is based in Singapore.