Stanley Black & Decker (NYSE:SWK) and Kadant (NYSE:KAI) are both industrial products companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, dividends, institutional ownership and risk.
Volatility and Risk
Stanley Black & Decker has a beta of 1.47, indicating that its stock price is 47% more volatile than the S&P 500. Comparatively, Kadant has a beta of 1.38, indicating that its stock price is 38% more volatile than the S&P 500.
Analyst Ratings
This is a breakdown of current recommendations and price targets for Stanley Black & Decker and Kadant, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Stanley Black & Decker | 0 | 4 | 9 | 0 | 2.69 |
Kadant | 0 | 2 | 1 | 0 | 2.33 |
Stanley Black & Decker presently has a consensus price target of $191.1538, suggesting a potential downside of 5.10%. Kadant has a consensus price target of $148.6667, suggesting a potential downside of 17.65%. Given Stanley Black & Decker's stronger consensus rating and higher probable upside, equities analysts plainly believe Stanley Black & Decker is more favorable than Kadant.
Dividends
Stanley Black & Decker pays an annual dividend of $2.80 per share and has a dividend yield of 1.4%. Kadant pays an annual dividend of $0.96 per share and has a dividend yield of 0.5%. Stanley Black & Decker pays out 33.3% of its earnings in the form of a dividend. Kadant pays out 17.9% 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 increased its dividend for 54 consecutive years and Kadant has increased its dividend for 7 consecutive years. Stanley Black & Decker is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Stanley Black & Decker and Kadant's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Stanley Black & Decker | 6.98% | 15.05% | 5.46% |
Kadant | 7.35% | 12.57% | 6.00% |
Institutional & Insider Ownership
85.4% of Stanley Black & Decker shares are held by institutional investors. Comparatively, 95.6% of Kadant shares are held by institutional investors. 1.0% of Stanley Black & Decker shares are held by company insiders. Comparatively, 2.3% of Kadant shares are held by company 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.
Valuation and Earnings
This table compares Stanley Black & Decker and Kadant's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Stanley Black & Decker | $14.44 billion | 2.24 | $955.80 million | $8.40 | 23.98 |
Kadant | $704.64 million | 2.97 | $52.07 million | $5.36 | 33.68 |
Stanley Black & Decker has higher revenue and earnings than Kadant. Stanley Black & Decker is trading at a lower price-to-earnings ratio than Kadant, indicating that it is currently the more affordable of the two stocks.
Summary
Stanley Black & Decker beats Kadant on 10 of the 17 factors compared between the two stocks.