Analyzing KLA (NASDAQ:KLAC) & TD SYNNEX (NYSE:SNX)

KLA (NASDAQ:KLAC) and TD SYNNEX (NYSE:SNX) are both large-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, risk, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Insider & Institutional Ownership

86.7% of KLA shares are held by institutional investors. Comparatively, 84.0% of TD SYNNEX shares are held by institutional investors. 91.5% of KLA shares are held by insiders. Comparatively, 0.7% of TD SYNNEX shares are held by 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 Recommendations

This is a breakdown of current ratings and recommmendations for KLA and TD SYNNEX, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KLA	0	10	20	0	2.67
TD SYNNEX	0	2	8	1	2.91

KLA presently has a consensus price target of $1,821.26, suggesting a potential downside of 2.56%. TD SYNNEX has a consensus price target of $197.70, suggesting a potential downside of 17.42%. Given KLA’s higher probable upside, analysts plainly believe KLA is more favorable than TD SYNNEX.

Valuation and Earnings

This table compares KLA and TD SYNNEX”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KLA	$12.16 billion	20.09	$4.06 billion	$35.33	52.91
TD SYNNEX	$65.14 billion	0.30	$827.66 million	$12.03	19.90

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

Volatility & Risk

KLA has a beta of 1.5, indicating that its share price is 50% more volatile than the S&P 500. Comparatively, TD SYNNEX has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500.

Dividends

KLA pays an annual dividend of $7.60 per share and has a dividend yield of 0.4%. TD SYNNEX pays an annual dividend of $1.92 per share and has a dividend yield of 0.8%. KLA pays out 21.5% of its earnings in the form of a dividend. TD SYNNEX pays out 16.0% 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. KLA has raised its dividend for 16 consecutive years and TD SYNNEX has raised its dividend for 5 consecutive years. TD SYNNEX is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares KLA and TD SYNNEX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KLA	35.66%	91.89%	29.21%
TD SYNNEX	1.52%	14.03%	3.63%

Summary

KLA beats TD SYNNEX on 13 of the 18 factors compared between the two stocks.

About KLA

KLA Corporation, together with its subsidiaries, engages in the design, manufacture, and marketing of process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide. It operates through three segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection. The company offers inspection and review tools to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and unpatterned wafers; metrology systems that are used to measure pattern dimensions, film thickness, film stress, layer-to-layer alignment, pattern placement, surface topography, and electro-optical properties for wafers; chemical process control equipment; wired and wireless sensor wafers and reticles; wafer defect inspection, review, and metrology systems; reticle inspection and metrology systems; and semiconductor software solutions that provide run-time process control, defect excursion identification, process corrections, and defect classification to accelerate yield learning rates and reduce production risk. It also provides etch, plasma dicing, deposition, and other wafer processing technologies and solutions for the semiconductor and microelectronics industry. In addition, the company offers direct imaging, inspection, optical shaping, inkjet and additive printing, UV laser drilling, and computer-aided manufacturing and engineering solutions for the PCB market; inspection and electrical testing systems to identify and classify defects, as well as systems to repair defects for the display market; and inspection and metrology systems for quality control and yield improvement in advanced and traditional semiconductor packaging markets. The company was formerly known as KLA-Tencor Corporation and changed its name to KLA Corporation in July 2019. KLA Corporation was incorporated in 1975 and is headquartered in Milpitas, California.

About TD SYNNEX

TD SYNNEX Corporation operates as a distributor and solutions aggregator for the information technology (IT) ecosystem. The company offers personal computing devices and peripherals, mobile phones and accessories, printers, supplies, and endpoint technology software; and data center technologies, such as hybrid cloud, security, storage, networking, servers, technology software, and converged and hyper-converged infrastructure, as well as computing components. It also provides systems design and rack integration, build-to-order, and configure-to-order assembly; and thermal testing, power-draw testing, burn-in, and quality and logistics support. In addition, the company offers outsourced fulfillment, virtual distribution, and direct ship to end-users; shipping documents generation, multi-level serial number tracking, and configured products and online order and shipment tracking, as well as turn-key logistics solutions. Further, it provides public cloud solutions in productivity and collaboration, IaaS, or Infrastructure as a Service, PaaS, or Platform as a Service, SaaS, or Software as a Service, security, mobility, IoT, and other hybrid solutions. Additionally, the company offers online services; provides net terms, third party leasing, floor plan financing, and letters-of-credit backed financing and arrangement; and leases products and provides device-as-a-service, as well as offers direct mail, external media advertising, reseller product training, targeted telemarketing campaigns, national and regional trade shows, trade groups, database analysis, print on demand services, and web-based marketing. It serves value-added resellers, corporate resellers, government resellers, system integrators, direct marketers, retailers, and managed service providers. The company was formerly known as SYNNEX Corporation and changed its name to TD SYNNEX Corporation in September 2021. TD SYNNEX Corporation was founded in 1974 and is headquartered in Fremont, California.