Xylem (NYSE:XYL) and Stanley Black & Decker (NYSE:SWK) are both large-cap industrial products companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, profitability, analyst recommendations and valuation.
Analyst Ratings
This is a breakdown of current recommendations for Xylem and Stanley Black & Decker, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Xylem | 3 | 11 | 2 | 0 | 1.94 |
Stanley Black & Decker | 1 | 3 | 9 | 0 | 2.62 |
Xylem currently has a consensus target price of $78.4167, indicating a potential downside of 22.43%. Stanley Black & Decker has a consensus target price of $184.6154, indicating a potential upside of 5.51%. Given Stanley Black & Decker's stronger consensus rating and higher probable upside, analysts plainly believe Stanley Black & Decker is more favorable than Xylem.
Dividends
Xylem pays an annual dividend of $1.12 per share and has a dividend yield of 1.1%. Stanley Black & Decker pays an annual dividend of $2.80 per share and has a dividend yield of 1.6%. Xylem pays out 37.1% of its earnings in the form of a dividend. Stanley Black & Decker pays out 33.3% 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. Xylem has raised its dividend for 1 consecutive years and Stanley Black & Decker has raised its dividend for 54 consecutive years. Stanley Black & Decker is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings & Valuation
This table compares Xylem and Stanley Black & Decker's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Xylem | $5.25 billion | 3.47 | $401 million | $3.02 | 33.47 |
Stanley Black & Decker | $14.44 billion | 1.95 | $955.80 million | $8.40 | 20.83 |
Stanley Black & Decker has higher revenue and earnings than Xylem. Stanley Black & Decker is trading at a lower price-to-earnings ratio than Xylem, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Xylem has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500. Comparatively, Stanley Black & Decker has a beta of 1.47, indicating that its stock price is 47% more volatile than the S&P 500.
Profitability
This table compares Xylem and Stanley Black & Decker's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Xylem | 5.09% | 14.72% | 5.44% |
Stanley Black & Decker | 6.98% | 15.05% | 5.46% |
Insider and Institutional Ownership
84.9% of Xylem shares are owned by institutional investors. Comparatively, 85.4% of Stanley Black & Decker shares are owned by institutional investors. 1.0% of Xylem shares are owned by company insiders. Comparatively, 1.0% of Stanley Black & Decker shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Summary
Stanley Black & Decker beats Xylem on 14 of the 17 factors compared between the two stocks.