Reliance Steel & Aluminum (NYSE:RS) and Nucor (NYSE:NUE) are both industrial products companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, analyst recommendations, profitability, risk and earnings.
Dividends
Reliance Steel & Aluminum pays an annual dividend of $2.50 per share and has a dividend yield of 1.9%. Nucor pays an annual dividend of $1.62 per share and has a dividend yield of 2.7%. Reliance Steel & Aluminum pays out 24.2% of its earnings in the form of a dividend. Nucor pays out 37.6% 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. Reliance Steel & Aluminum has raised its dividend for 1 consecutive years and Nucor has raised its dividend for 48 consecutive years. Nucor is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
78.4% of Reliance Steel & Aluminum shares are held by institutional investors. Comparatively, 75.1% of Nucor shares are held by institutional investors. 3.4% of Reliance Steel & Aluminum shares are held by insiders. Comparatively, 1.4% of Nucor shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Analyst Ratings
This is a summary of recent ratings and target prices for Reliance Steel & Aluminum and Nucor, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Reliance Steel & Aluminum | 0 | 3 | 3 | 0 | 2.50 |
Nucor | 0 | 7 | 4 | 0 | 2.36 |
Reliance Steel & Aluminum presently has a consensus target price of $110.6667, suggesting a potential downside of 16.29%. Nucor has a consensus target price of $49.90, suggesting a potential downside of 16.58%. Given Reliance Steel & Aluminum's stronger consensus rating and higher possible upside, research analysts clearly believe Reliance Steel & Aluminum is more favorable than Nucor.
Volatility & Risk
Reliance Steel & Aluminum has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500. Comparatively, Nucor has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.
Profitability
This table compares Reliance Steel & Aluminum and Nucor's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Reliance Steel & Aluminum | 4.44% | 10.72% | 6.75% |
Nucor | 2.15% | 7.21% | 4.13% |
Earnings and Valuation
This table compares Reliance Steel & Aluminum and Nucor's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Reliance Steel & Aluminum | $10.97 billion | 0.77 | $701.50 million | $10.34 | 12.79 |
Nucor | $22.59 billion | 0.80 | $1.27 billion | $4.31 | 13.88 |
Nucor has higher revenue and earnings than Reliance Steel & Aluminum. Reliance Steel & Aluminum is trading at a lower price-to-earnings ratio than Nucor, indicating that it is currently the more affordable of the two stocks.
Summary
Reliance Steel & Aluminum beats Nucor on 9 of the 17 factors compared between the two stocks.