Arcosa (NYSE:ACA) and RPM International (NYSE:RPM) are both construction companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.
Dividends
Arcosa pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. RPM International pays an annual dividend of $1.52 per share and has a dividend yield of 1.8%. Arcosa pays out 8.5% of its earnings in the form of a dividend. RPM International pays out 49.5% 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. Arcosa has raised its dividend for 1 consecutive years and RPM International has raised its dividend for 19 consecutive years. RPM International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Arcosa and RPM International's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Arcosa | $1.74 billion | 1.64 | $113.30 million | $2.35 | 25.17 |
RPM International | $5.51 billion | 1.97 | $304.39 million | $3.07 | 27.21 |
RPM International has higher revenue and earnings than Arcosa. Arcosa is trading at a lower price-to-earnings ratio than RPM International, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Arcosa and RPM International's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Arcosa | 6.09% | 6.77% | 4.91% |
RPM International | 7.50% | 35.72% | 8.85% |
Analyst Ratings
This is a breakdown of current recommendations for Arcosa and RPM International, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Arcosa | 0 | 4 | 2 | 0 | 2.33 |
RPM International | 0 | 5 | 4 | 0 | 2.44 |
Arcosa currently has a consensus target price of $61.50, suggesting a potential upside of 3.97%. RPM International has a consensus target price of $93.6667, suggesting a potential upside of 12.15%. Given RPM International's stronger consensus rating and higher possible upside, analysts plainly believe RPM International is more favorable than Arcosa.
Volatility and Risk
Arcosa has a beta of 0.42, indicating that its share price is 58% less volatile than the S&P 500. Comparatively, RPM International has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.
Insider and Institutional Ownership
85.8% of Arcosa shares are held by institutional investors. Comparatively, 74.7% of RPM International shares are held by institutional investors. 0.5% of Arcosa shares are held by insiders. Comparatively, 1.6% of RPM International shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Summary
RPM International beats Arcosa on 15 of the 17 factors compared between the two stocks.