Brooks Automation: No Debt, Reasonable Dividends

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Mar 12, 2012
Brooks Automation (BRKS, Financial) is an international leader in the supply of automation products, vacuum and instrumentation solutions. It supplies these solutions to the global semiconductor and other related industries, like life sciences, and clean energy. The largest market it serves is the global semiconductor manufacturing sector. It effectively meets its clients’ needs across a broad spectrum of applications and in many industries.


Brooks Automation provides customers with technologies that speed up marketing and guarantee high uptime and rapid response. This makes for extreme value in mission-led controlled environments.


This stock is priced at about $12. Its 52-week range is not so wide at $7 to $14. Its average trading volume for 3 months has been 386,966. It has a market capitalization of $765 million. The earnings per share is $1.66 and its price to earnings ratio is 7.31. It yields a nice dividend of 2.6%.


Its competitor in the industry, Amtech Systems (ASYS, Financial) is priced at $8 and gives no dividend. Its earnings per share is $1.75 and price to earnings ratio is 4.67. Its average 3 month volume is 201,456. It has a market cap of $77 million.


Brooks has 1,433 employees while Amtech has 340. That is where the favorable comparison ends as the quarterly year-on-year earnings growth for Brooks is -27.9% while it is 31.8% for Amtech Systems. Brooks’ gross margin is 32.5%, its earnings before interest, taxes, depreciation and amortization is $99.41 million, its operating margin is 11.94%, and its 5 year price/earnings to growth is 1.11. Amtech has a gross margin of 36.75%; its EBITDA is $44.85million, its operating margin is 17.04% and 5 year expected price/earnings to growth is -8.46. In terms of its market cap, Brooks is ranked 28/80 in the industry. For its revenue quarterly growth it gets 60/80. Its return on equity earns it 5/80. And for its dividend yield it gets second place.


Brooks Automation has a profit margin of 18.65%. Its return on assets is 8.89%, its return on equity being 28.28%.


Wonderful to note that this company has zero debt and thus the debt-equity ratio doesn’t come into the picture. The current ratio is 3.35.


Growth figures are a bit iffy. For the year 2012, growth is expected to be -58.3%, not very optimistic. For 2013, it jumps to 110.9%. The past 5 years’ growth per annum has been 5.53% and for the next 5 years it is projected at 18% per annum. With its high price target being set at $13, this share is a Hold at best.


It received a downgrade from Brigantine in April 2011 from Buy to Hold.


Brooks Automation Inc. filed its SEC Form 8-K as regards change in Directors, financial statements and exhibits.


In November 2011, Brooks was added to Zack’s Strong Sell list. That must not feel very nice for any company, to be downgraded. What to do, par for the course in the field of investing.


Some of the solutions provided by Brooks are as follows:


· RFID systems solutions


· Cryogenic refrigeration systems


· Cryogenic pumps


· Vacuum measurement solutions


· Alignment and calibration


· Brooks life sciences system


· Brooks Solution Provider Program.


In November 2011, Brooks Automation Inc. earned new star ratings as can be seen here.


The company’s fourth quarter profit fell 50% in 2011, not a nice report. It had been strong for the same period in 2010 but economic weakness is what did it. Its income fell to $12.1 million versus what it was same time, same place a year previously, $24.2 million. What had boosted income in 2010 were earnings from the sale of a manufacturing business. The economic weakness was in connection with the industry weakness for LED tools and the semiconductor business fell short of the company’s high expectations.


Brooks does focus on controllable aspects of its business, constantly striving to make improvements.


If you are thinking it is time for some bright news, here it is: September 2011, Brooks Semiconductor Inc. was named as one of 4 cheap semiconductor companies with superior yield. Volatility at that point was high and high risk stocks were being sold. You know how it is in the market when panic strikes. Back then, it was an even better buy at $8.5. Its awesome dividend was cited with the assurance that it could keep it up.


Since 1978, the Massachusetts-based Brooks Automation has been a partner to the global semi-conductor manufacturing market. Its spectrum has been expanded through strategic business expansions and product development. This expansion is what has extended the services of Brooks Automation to meet the needs of those in the fields of life sciences, clean energy solutions, and analytical and research markets. If dividend is your only attraction, then this could be worth your consideration. Especially if, like yours truly, you are a big fan of zero-debt companies.