Franklin Electric (NASDAQ:FELE) and Rockwell Automation (NYSE:ROK) are both industrial products companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, valuation, risk, earnings, dividends, analyst recommendations and institutional ownership.
Analyst Recommendations
This is a summary of current ratings and target prices for Franklin Electric and Rockwell Automation, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Franklin Electric | 0 | 2 | 2 | 0 | 2.50 |
Rockwell Automation | 3 | 9 | 8 | 0 | 2.25 |
Franklin Electric currently has a consensus target price of $61.00, indicating a potential downside of 18.73%. Rockwell Automation has a consensus target price of $234.4667, indicating a potential downside of 3.62%. Given Rockwell Automation's higher probable upside, analysts clearly believe Rockwell Automation is more favorable than Franklin Electric.
Profitability
This table compares Franklin Electric and Rockwell Automation's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Franklin Electric | 7.50% | 12.16% | 8.13% |
Rockwell Automation | 16.17% | 81.39% | 12.65% |
Dividends
Franklin Electric pays an annual dividend of $0.70 per share and has a dividend yield of 0.9%. Rockwell Automation pays an annual dividend of $4.28 per share and has a dividend yield of 1.8%. Franklin Electric pays out 33.8% of its earnings in the form of a dividend. Rockwell Automation pays out 55.7% 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. Franklin Electric has raised its dividend for 1 consecutive years and Rockwell Automation has raised its dividend for 11 consecutive years. Rockwell Automation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Franklin Electric has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500. Comparatively, Rockwell Automation has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500.
Insider and Institutional Ownership
77.0% of Franklin Electric shares are owned by institutional investors. Comparatively, 76.2% of Rockwell Automation shares are owned by institutional investors. 2.8% of Franklin Electric shares are owned by insiders. Comparatively, 0.8% of Rockwell Automation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares Franklin Electric and Rockwell Automation's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Franklin Electric | $1.31 billion | 2.64 | $95.48 million | $2.07 | 36.26 |
Rockwell Automation | $6.33 billion | 4.46 | $1.02 billion | $7.68 | 31.68 |
Rockwell Automation has higher revenue and earnings than Franklin Electric. Rockwell Automation is trading at a lower price-to-earnings ratio than Franklin Electric, indicating that it is currently the more affordable of the two stocks.
Summary
Rockwell Automation beats Franklin Electric on 12 of the 17 factors compared between the two stocks.