Stanley Black & Decker (NYSE:SWK) and Illinois Tool Works (NYSE:ITW) are both large-cap industrial products companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, analyst recommendations, risk, valuation, dividends and institutional ownership.
Analyst Recommendations
This is a breakdown of recent recommendations for Stanley Black & Decker and Illinois Tool Works, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Stanley Black & Decker | 1 | 3 | 9 | 0 | 2.62 |
| Illinois Tool Works | 1 | 11 | 4 | 0 | 2.19 |
Stanley Black & Decker currently has a consensus target price of $184.6154, indicating a potential upside of 5.05%. Illinois Tool Works has a consensus target price of $204.6875, indicating a potential upside of 1.08%. Given Stanley Black & Decker's stronger consensus rating and higher probable upside, equities research analysts clearly believe Stanley Black & Decker is more favorable than Illinois Tool Works.
Dividends
Stanley Black & Decker pays an annual dividend of $2.80 per share and has a dividend yield of 1.6%. Illinois Tool Works pays an annual dividend of $4.56 per share and has a dividend yield of 2.3%. Stanley Black & Decker pays out 33.3% of its earnings in the form of a dividend. Illinois Tool Works pays out 58.8% 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. Stanley Black & Decker has raised its dividend for 54 consecutive years and Illinois Tool Works has raised its dividend for 50 consecutive years.
Profitability
This table compares Stanley Black & Decker and Illinois Tool Works' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Stanley Black & Decker | 6.98% | 15.05% | 5.46% |
| Illinois Tool Works | 16.77% | 80.95% | 14.37% |
Volatility and Risk
Stanley Black & Decker has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500. Comparatively, Illinois Tool Works has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.
Institutional and Insider Ownership
85.4% of Stanley Black & Decker shares are owned by institutional investors. Comparatively, 77.4% of Illinois Tool Works shares are owned by institutional investors. 1.0% of Stanley Black & Decker shares are owned by insiders. Comparatively, 0.8% of Illinois Tool Works shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Stanley Black & Decker and Illinois Tool Works' revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Stanley Black & Decker | $14.44 billion | 1.95 | $955.80 million | $8.40 | 20.83 |
| Illinois Tool Works | $14.11 billion | 4.50 | $2.52 billion | $7.75 | 25.88 |
Illinois Tool Works has lower revenue, but higher earnings than Stanley Black & Decker. Stanley Black & Decker is trading at a lower price-to-earnings ratio than Illinois Tool Works, indicating that it is currently the more affordable of the two stocks.
Summary
Stanley Black & Decker beats Illinois Tool Works on 10 of the 17 factors compared between the two stocks.
