In the fast-paced world of semiconductors, Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI) stand out as key players driving innovation and efficiency. Both companies specialize in process control tools essential for semiconductor manufacturing, making them direct competitors with significant market overlap. Their cutting-edge technology and strategic approaches to product development position them as attractive options for investors. In this article, I will analyze these two companies to help you determine which one may be the most compelling investment choice.
Table of contents
Company Overview
Onto Innovation Inc. Overview
Onto Innovation Inc. is a prominent player in the semiconductor industry, specializing in the design, development, and support of advanced process control tools. The company focuses on macro defect inspection, optical metrology, and lithography systems, providing essential solutions for process and yield management. With a market capitalization of approximately $7B, Onto Innovation is headquartered in Wilmington, Massachusetts, and caters to a diverse range of sectors, including silicon wafer and LED manufacturing. Their innovative products are crucial for enhancing the efficiency of semiconductor production processes.
Nova Ltd. Overview
Nova Ltd. operates in the same semiconductor space, offering a robust portfolio of process control systems that are integral to semiconductor manufacturing. Their technology includes metrology platforms designed for precise measurement and control across various manufacturing steps, such as lithography and deposition. With a market capitalization close to $9B and based in Rehovot, Israel, Nova serves a global clientele, including logic and memory manufacturers. The company’s commitment to innovation has positioned it as a key contributor to advancements in semiconductor technology.
Key similarities and differences
Both Onto Innovation and Nova Ltd. share a commitment to providing advanced process control solutions for the semiconductor industry, yet they differ in their product focus and geographic reach. Onto primarily emphasizes macro defect inspection and metrology, while Nova offers a broader range of metrology platforms across various semiconductor processes.
Income Statement Comparison
Below is a comparison of the most recent income statements for Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI). This overview provides a snapshot of their financial health.
| Metric | Onto Innovation Inc. | Nova Ltd. |
|---|---|---|
| Market Cap | 7.02B | 9.23B |
| Revenue | 987.32M | 672.40M |
| EBITDA | 249.41M | 204.92M |
| EBIT | 187.10M | 187.54M |
| Net Income | 201.67M | 183.76M |
| EPS | 4.09 | 6.31 |
| Fiscal Year | 2024 | 2024 |
Interpretation of Income Statement
In the most recent fiscal year, Onto Innovation reported a revenue increase to 987.32M, up from 815.87M in the previous year, indicating robust growth. Nova Ltd. also saw revenue growth, but at a slower rate, jumping from 517.92M to 672.40M. Both companies maintained stable margins, with Onto showing an EBITDA margin improvement, reflecting operational efficiency. Overall, while Onto Innovation’s growth accelerated, Nova’s performance was solid but indicated a need for greater momentum to keep pace in the competitive semiconductor market.
Financial Ratios Comparison
The following table presents a comparative analysis of financial metrics for Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI) based on the most recent available data.
| Metric | [Company A: ONTO] | [Company B: NVMI] |
|---|---|---|
| ROE | 10.47% | 19.81% |
| ROIC | 8.74% | 13.39% |
| P/E | 41.76 | 31.20 |
| P/B | 4.37 | 6.18 |
| Current Ratio | 8.69 | 2.32 |
| Quick Ratio | 7.00 | 1.92 |
| D/E | 0.01 | 0.25 |
| Debt-to-Assets | 0.01 | 0.17 |
| Interest Coverage | N/A | 116.20 |
| Asset Turnover | 0.47 | 0.48 |
| Fixed Asset Turnover | 7.16 | 5.06 |
| Payout ratio | 0% | 0% |
| Dividend yield | 0% | 0% |
Interpretation of Financial Ratios
Analyzing the ratios, ONTO exhibits strong liquidity with a current ratio of 8.69, indicating a solid short-term financial position. However, its P/E ratio of 41.76 suggests it may be overvalued compared to NVMI, which has a lower P/E at 31.20. NVMI shows superior profitability with a higher ROE of 19.81%, reflecting efficient use of equity. The high interest coverage ratio for NVMI indicates robust debt management, while ONTO’s lack of interest coverage suggests it may face challenges in servicing any future debt. Overall, both companies have strengths and weaknesses that warrant careful consideration.
Dividend and Shareholder Returns
Both Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI) do not pay dividends, focusing instead on reinvestment strategies and growth opportunities. This approach is common among companies in high-growth phases, allowing them to prioritize R&D and acquisitions. Notably, both companies engage in share buyback programs, which can provide shareholder value by reducing outstanding shares. While this strategy can enhance long-term value creation, it carries risks, such as the potential for excessive repurchases, which may not always align with sustainable growth.
Strategic Positioning
In the semiconductor sector, Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI) are notable players, each holding significant market shares. Onto focuses on macro defect inspection and optical metrology, while Nova specializes in process control systems. Competitive pressure is high as both companies face technological disruptions, particularly from advancements in AI and automation. With a market cap of 7B for Onto and 9B for Nova, they are well-positioned yet must continually innovate to maintain their edge.
Stock Comparison
In this section, we will analyze the stock price movements and trading dynamics of Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI) over the past year, focusing on key price changes and market performance.
Trend Analysis
Onto Innovation Inc. (ONTO) has experienced a price change of 5.12% over the past year, indicating a bullish trend. The stock has shown signs of acceleration with a notable high of 233.14 and a low of 88.5. The standard deviation of 42.33 suggests moderate volatility, which warrants cautious trading strategies.
In the recent period from September 14, 2025, to November 30, 2025, the stock saw a significant increase of 29.0%, with a trend slope of 1.45. The standard deviation of 9.18 indicates lower volatility during this timeframe, reinforcing confidence in the upward movement.
Nova Ltd. (NVMI) has reported an impressive 141.91% price change over the past year, which also reflects a bullish trend. However, the trend shows signs of deceleration, with a highest price of 345.06 and a lowest price of 129.32. The standard deviation of 48.52 points to higher volatility, suggesting that investors should be vigilant.
In the recent analysis period, NVMI demonstrated a price change of 6.73%, but the trend slope of -0.39 indicates a slight decline in momentum. With a standard deviation of 19.49, the stock’s volatility remains a factor to consider for risk management.
Both stocks exhibit strong buyer interest, with ONTO showing a buyer dominance percentage of 79.58% and NVMI at 61.32%, highlighting positive market sentiment.
Analyst Opinions
Recent analyst recommendations indicate a positive outlook for both Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI). ONTO received a rating of B, reflecting strong performance in return on assets and a solid overall score. Analysts suggest a “hold” position based on its current valuation. Conversely, NVMI earned a B+ rating, driven by excellent return on equity and assets, with a recommendation to “buy” due to its robust fundamentals. The consensus for 2025 leans towards a “buy” for NVMI, while ONTO remains a cautious “hold.”
Stock Grades
In this section, I present the recent stock ratings for Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI) from reputable grading companies.
Onto Innovation Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B. Riley Securities | maintain | Buy | 2025-11-18 |
| Needham | maintain | Buy | 2025-11-18 |
| Evercore ISI Group | maintain | Outperform | 2025-11-05 |
| Oppenheimer | maintain | Outperform | 2025-10-14 |
| Stifel | maintain | Hold | 2025-10-13 |
| B. Riley Securities | maintain | Buy | 2025-10-10 |
| Jefferies | upgrade | Buy | 2025-09-23 |
| B. Riley Securities | maintain | Buy | 2025-08-08 |
| Benchmark | maintain | Buy | 2025-08-08 |
| Cantor Fitzgerald | maintain | Neutral | 2025-06-24 |
Nova Ltd. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Evercore ISI Group | maintain | Outperform | 2025-11-07 |
| Benchmark | maintain | Buy | 2025-11-07 |
| B of A Securities | maintain | Buy | 2025-06-24 |
| Cantor Fitzgerald | maintain | Overweight | 2025-06-24 |
| Citigroup | maintain | Buy | 2025-05-09 |
| Benchmark | maintain | Buy | 2025-05-09 |
| B of A Securities | maintain | Buy | 2025-04-16 |
| Cantor Fitzgerald | maintain | Overweight | 2025-03-14 |
| Benchmark | maintain | Buy | 2025-02-14 |
| Needham | maintain | Hold | 2025-02-14 |
Overall, both stocks show a robust trend, with multiple “Buy” and “Outperform” ratings from various analysts, indicating strong confidence in their performance moving forward. Notably, Onto Innovation has seen a recent upgrade from Jefferies, suggesting positive momentum.
Target Prices
The latest consensus target prices reflect optimistic expectations from analysts for both Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI).
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Onto Innovation Inc. | 180 | 120 | 153.33 |
| Nova Ltd. | 224 | 210 | 217 |
Analysts expect Onto Innovation Inc. to reach a consensus target of 153.33, which is above its current price of 143.16. Nova Ltd. has a higher consensus of 217 compared to its current price of 312.84, indicating a potential overvaluation at this time.
Strengths and Weaknesses
The following table outlines the strengths and weaknesses of Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI) based on the most recent data available.
| Criterion | Onto Innovation Inc. | Nova Ltd. |
|---|---|---|
| Diversification | Moderate | High |
| Profitability | Strong (20.43% net margin) | Strong (26.33% net margin) |
| Innovation | High | High |
| Global presence | Moderate | Strong |
| Market Share | Growing | Established |
| Debt level | Low (0.007) | Moderate (0.170) |
In summary, both companies exhibit strong profitability and innovation. However, Nova Ltd. shows a more significant global presence and diversification, while Onto Innovation maintains a lower debt level, which is a crucial factor for risk management.
Risk Analysis
The following table outlines various risks associated with Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI). Each risk is assessed based on the most recent data.
| Metric | Onto Innovation Inc. | Nova Ltd. |
|---|---|---|
| Market Risk | High | Medium |
| Regulatory Risk | Medium | High |
| Operational Risk | Medium | Medium |
| Environmental Risk | Low | Medium |
| Geopolitical Risk | Medium | High |
In analyzing the risks, market and geopolitical risks stand out as significant concerns for both companies, primarily due to the volatile semiconductor industry and global supply chain dependencies. Notably, geopolitical tensions, especially in key manufacturing regions, can profoundly impact operational stability and market access.
Which one to choose?
When comparing Onto Innovation Inc. (ONTO) and Nova Ltd. (NVMI), both companies exhibit strong fundamentals, yet differ in specific aspects. ONTO shows a net profit margin of 20.43% and a price-to-earnings (P/E) ratio of 41.76, while NVMI boasts a higher profit margin of 27.33% and a lower P/E ratio of 31.20. Analyst ratings also favor NVMI with a B+ grade compared to ONTO’s B rating.
In terms of stock trends, ONTO has demonstrated a bullish trend with a recent price increase of 29%, while NVMI’s stock has increased by 141.91% overall but is currently experiencing deceleration.
Investors focused on growth may prefer NVMI for its higher margins and robust historical performance, while those prioritizing stability may find ONTO appealing due to its strong liquidity ratios and consistent growth.
However, investors should remain cautious of potential risks such as market dependence and competition in the semiconductor equipment sector.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of Onto Innovation Inc. and Nova Ltd. to enhance your investment decisions:
