Encore Wire (NASDAQ:WIRE) and Rockwell Automation (NYSE:ROK) 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, dividends, risk, valuation, analyst recommendations, profitability and earnings.
Dividends
Encore Wire pays an annual dividend of $0.08 per share and has a dividend yield of 0.1%. Rockwell Automation pays an annual dividend of $4.28 per share and has a dividend yield of 1.6%. Encore Wire pays out 2.9% 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. Encore Wire has increased its dividend for 1 consecutive years and Rockwell Automation has increased 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.
Valuation & Earnings
This table compares Encore Wire and Rockwell Automation's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Encore Wire | $1.27 billion | 1.13 | $58.13 million | $2.77 | 25.19 |
Rockwell Automation | $6.33 billion | 4.86 | $1.02 billion | $7.68 | 34.47 |
Rockwell Automation has higher revenue and earnings than Encore Wire. Encore Wire is trading at a lower price-to-earnings ratio than Rockwell Automation, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
87.8% of Encore Wire shares are owned by institutional investors. Comparatively, 76.2% of Rockwell Automation shares are owned by institutional investors. 3.2% of Encore Wire 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, endowments and hedge funds believe a stock will outperform the market over the long term.
Volatility & Risk
Encore Wire has a beta of 1.24, suggesting that its share price is 24% more 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.
Profitability
This table compares Encore Wire and Rockwell Automation's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Encore Wire | 4.91% | 7.43% | 6.61% |
Rockwell Automation | 16.17% | 81.39% | 12.65% |
Analyst Recommendations
This is a summary of recent recommendations for Encore Wire and Rockwell Automation, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Encore Wire | 0 | 1 | 1 | 0 | 2.50 |
Rockwell Automation | 3 | 9 | 7 | 0 | 2.21 |
Encore Wire currently has a consensus price target of $72.50, indicating a potential upside of 3.63%. Rockwell Automation has a consensus price target of $250.3077, indicating a potential downside of 5.56%. Given Encore Wire's stronger consensus rating and higher possible upside, equities analysts clearly believe Encore Wire is more favorable than Rockwell Automation.
Summary
Rockwell Automation beats Encore Wire on 12 of the 17 factors compared between the two stocks.