H&E Equipment Services (NASDAQ:HEES) and Fastenal (NASDAQ:FAST) are both industrial products companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, profitability, valuation and earnings.
Insider and Institutional Ownership
66.4% of H&E Equipment Services shares are held by institutional investors. Comparatively, 77.1% of Fastenal shares are held by institutional investors. 11.7% of H&E Equipment Services shares are held by company insiders. Comparatively, 0.6% of Fastenal shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Dividends
H&E Equipment Services pays an annual dividend of $1.10 per share and has a dividend yield of 3.4%. Fastenal pays an annual dividend of $1.12 per share and has a dividend yield of 2.5%. H&E Equipment Services pays out 41.2% of its earnings in the form of a dividend. Fastenal pays out 81.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. H&E Equipment Services has raised its dividend for 1 consecutive years and Fastenal has raised its dividend for 1 consecutive years. H&E Equipment Services is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Ratings
This is a breakdown of recent ratings and price targets for H&E Equipment Services and Fastenal, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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H&E Equipment Services | 0 | 0 | 3 | 0 | 3.00 |
Fastenal | 1 | 6 | 3 | 0 | 2.20 |
H&E Equipment Services currently has a consensus target price of $33.00, suggesting a potential upside of 2.84%. Fastenal has a consensus target price of $44.7778, suggesting a potential upside of 1.38%. Given H&E Equipment Services' stronger consensus rating and higher probable upside, analysts plainly believe H&E Equipment Services is more favorable than Fastenal.
Volatility and Risk
H&E Equipment Services has a beta of 2.4, meaning that its stock price is 140% more volatile than the S&P 500. Comparatively, Fastenal has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500.
Earnings & Valuation
This table compares H&E Equipment Services and Fastenal's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
H&E Equipment Services | $1.35 billion | 0.86 | $87.21 million | $2.67 | 12.02 |
Fastenal | $5.33 billion | 4.76 | $790.90 million | $1.38 | 32.01 |
Fastenal has higher revenue and earnings than H&E Equipment Services. H&E Equipment Services is trading at a lower price-to-earnings ratio than Fastenal, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares H&E Equipment Services and Fastenal's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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H&E Equipment Services | 0.32% | 22.55% | 3.35% |
Fastenal | 15.12% | 30.63% | 21.14% |
Summary
H&E Equipment Services beats Fastenal on 8 of the 15 factors compared between the two stocks.