Acuity Brands (NYSE:AYI) and Rockwell Automation (NYSE:ROK) are both construction companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, analyst recommendations, risk, valuation, institutional ownership and earnings.
Insider & Institutional Ownership
97.2% of Acuity Brands shares are owned by institutional investors. Comparatively, 76.2% of Rockwell Automation shares are owned by institutional investors. 2.0% of Acuity Brands shares are owned by company insiders. Comparatively, 0.8% of Rockwell Automation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Risk & Volatility
Acuity Brands has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500. Comparatively, Rockwell Automation has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500.
Dividends
Acuity Brands pays an annual dividend of $0.52 per share and has a dividend yield of 0.4%. Rockwell Automation pays an annual dividend of $4.28 per share and has a dividend yield of 1.7%. Acuity Brands pays out 6.9% 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. Acuity Brands 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.
Analyst Recommendations
This is a breakdown of recent recommendations for Acuity Brands and Rockwell Automation, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Acuity Brands | 3 | 2 | 4 | 0 | 2.11 |
Rockwell Automation | 3 | 9 | 8 | 0 | 2.25 |
Acuity Brands currently has a consensus price target of $102.7778, suggesting a potential downside of 18.09%. Rockwell Automation has a consensus price target of $234.4667, suggesting a potential downside of 6.13%. Given Rockwell Automation's stronger consensus rating and higher possible upside, analysts clearly believe Rockwell Automation is more favorable than Acuity Brands.
Valuation & Earnings
This table compares Acuity Brands 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 |
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Acuity Brands | $3.33 billion | 1.37 | $248.30 million | $7.51 | 16.80 |
Rockwell Automation | $6.33 billion | 4.57 | $1.02 billion | $7.68 | 32.40 |
Rockwell Automation has higher revenue and earnings than Acuity Brands. Acuity Brands is trading at a lower price-to-earnings ratio than Rockwell Automation, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Acuity Brands and Rockwell Automation's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Acuity Brands | 7.64% | 14.50% | 8.67% |
Rockwell Automation | 16.17% | 81.39% | 12.65% |
Summary
Rockwell Automation beats Acuity Brands on 13 of the 17 factors compared between the two stocks.