Analyzing Applied Materials (NASDAQ:AMAT) and Shoals Technologies Group (NASDAQ:SHLS)

Applied Materials (NASDAQ:AMAT) and Shoals Technologies Group (NASDAQ:SHLS) are both computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Risk and Volatility

Applied Materials has a beta of 1.56, indicating that its stock price is 56% more volatile than the S&P 500. Comparatively, Shoals Technologies Group has a beta of 1.76, indicating that its stock price is 76% more volatile than the S&P 500.

Valuation & Earnings

This table compares Applied Materials and Shoals Technologies Group’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Materials	$26.52 billion	6.14	$6.86 billion	$8.70	22.61
Shoals Technologies Group	$488.94 million	2.25	$39.97 million	$0.18	35.84

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

Institutional and Insider Ownership

80.6% of Applied Materials shares are owned by institutional investors. 0.3% of Applied Materials shares are owned by company insiders. Comparatively, 1.7% of Shoals Technologies Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Applied Materials	27.57%	41.22%	22.18%
Shoals Technologies Group	6.42%	13.95%	9.02%

Analyst Recommendations

This is a breakdown of recent recommendations for Applied Materials and Shoals Technologies Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Materials	0	6	19	0	2.76
Shoals Technologies Group	3	4	12	0	2.47

Applied Materials presently has a consensus target price of $224.84, indicating a potential upside of 14.28%. Shoals Technologies Group has a consensus target price of $15.06, indicating a potential upside of 133.47%. Given Shoals Technologies Group’s higher probable upside, analysts clearly believe Shoals Technologies Group is more favorable than Applied Materials.

Summary

Applied Materials beats Shoals Technologies Group on 10 of the 14 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 Shoals Technologies Group

Shoals Technologies Group, Inc. provides electrical balance of system (EBOS) solutions and components for solar, battery energy, and electric vehicle (EV) charging applications in the United States and internationally. The company designs, manufactures, and sells system solutions for both homerun and combine-as-you-go wiring architectures, as well as offers technical support services. It provides EBOS components, including combiners; plug-n-play branch connectors and inline fuses; AC disconnects; recombiners; wireless monitoring; junction boxes; wire management; EV power cabinets; and battery energy storage systems cabinets, as well as cable assemblies, transition enclosures, and splice boxes. In addition, the company offers eMobility solutions, such as a power center, which combines equipment needed to protect the charging equipment and transform voltage levels from the electric utility to those needed on the respective site; quick connect solutions for chargers to connect to the Shoals system; big lead assembly (BLA) technology in the EV space to connect multiple chargers to a single power center; and a raceway system that protects the above ground EV BLAs in walk over and drive over applications. Further, it provides Snapshot IV, a solar operations and maintenance solution that monitors the specific voltage and current of individual solar panels and compares the results against the manufacturer's projected performance. The company sells its products to engineering, procurement, and construction firms that build solar energy projects; utilities; solar developers, independent power producers; solar module manufacturers; and charge point operators. Shoals Technologies Group, Inc. was founded in 1996 and is headquartered in Portland, Tennessee.