Illinois Tool Works (NYSE:ITW) and Energy Recovery (NASDAQ:ERII) are both industrial products companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, risk, analyst recommendations, earnings, valuation, profitability and institutional ownership.
Risk & Volatility
Illinois Tool Works has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, Energy Recovery has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500.
Earnings & Valuation
This table compares Illinois Tool Works and Energy Recovery's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Illinois Tool Works | $14.11 billion | 4.63 | $2.52 billion | $7.75 | 26.65 |
Energy Recovery | $86.94 million | 10.80 | $10.91 million | $0.18 | 93.00 |
Illinois Tool Works has higher revenue and earnings than Energy Recovery. Illinois Tool Works is trading at a lower price-to-earnings ratio than Energy Recovery, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
77.4% of Illinois Tool Works shares are held by institutional investors. Comparatively, 40.1% of Energy Recovery shares are held by institutional investors. 0.8% of Illinois Tool Works shares are held by insiders. Comparatively, 17.4% of Energy Recovery shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Profitability
This table compares Illinois Tool Works and Energy Recovery's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Illinois Tool Works | 16.77% | 80.95% | 14.37% |
Energy Recovery | 20.61% | 16.23% | 12.72% |
Analyst Ratings
This is a breakdown of current ratings and price targets for Illinois Tool Works and Energy Recovery, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Illinois Tool Works | 1 | 11 | 4 | 0 | 2.19 |
Energy Recovery | 0 | 1 | 2 | 0 | 2.67 |
Illinois Tool Works currently has a consensus target price of $204.6875, indicating a potential downside of 0.88%. Energy Recovery has a consensus target price of $12.75, indicating a potential downside of 23.84%. Given Illinois Tool Works' higher probable upside, research analysts plainly believe Illinois Tool Works is more favorable than Energy Recovery.
Summary
Illinois Tool Works beats Energy Recovery on 8 of the 14 factors compared between the two stocks.