A. O. Smith (NYSE:AOS) and UFP Industries (NASDAQ:UFPI) are both industrial products companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitability and earnings.
Valuation and Earnings
This table compares A. O. Smith and UFP Industries' revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| A. O. Smith | $2.99 billion | 3.74 | $370 million | $2.22 | 31.42 |
| UFP Industries | $4.42 billion | 1.13 | $179.65 million | $2.91 | 27.84 |
A. O. Smith has higher earnings, but lower revenue than UFP Industries. UFP Industries is trading at a lower price-to-earnings ratio than A. O. Smith, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
75.1% of A. O. Smith shares are owned by institutional investors. Comparatively, 79.4% of UFP Industries shares are owned by institutional investors. 0.3% of A. O. Smith shares are owned by insiders. Comparatively, 3.0% of UFP Industries shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Profitability
This table compares A. O. Smith and UFP Industries' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| A. O. Smith | 11.25% | 19.29% | 10.75% |
| UFP Industries | 4.66% | 16.77% | 10.83% |
Volatility and Risk
A. O. Smith has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500. Comparatively, UFP Industries has a beta of 1.42, suggesting that its stock price is 42% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current recommendations and price targets for A. O. Smith and UFP Industries, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| A. O. Smith | 1 | 6 | 2 | 0 | 2.11 |
| UFP Industries | 0 | 2 | 3 | 0 | 2.60 |
A. O. Smith presently has a consensus target price of $60.2857, suggesting a potential downside of 13.74%. UFP Industries has a consensus target price of $80.60, suggesting a potential downside of 0.33%. Given UFP Industries' stronger consensus rating and higher possible upside, analysts plainly believe UFP Industries is more favorable than A. O. Smith.
Dividends
A. O. Smith pays an annual dividend of $1.04 per share and has a dividend yield of 1.5%. UFP Industries pays an annual dividend of $0.60 per share and has a dividend yield of 0.7%. A. O. Smith pays out 46.8% of its earnings in the form of a dividend. UFP Industries pays out 20.6% 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. A. O. Smith has raised its dividend for 29 consecutive years and UFP Industries has raised its dividend for 1 consecutive years. A. O. Smith is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
UFP Industries beats A. O. Smith on 10 of the 17 factors compared between the two stocks.
