Analyzing Emerson Electric (EMR) and AZZ (NYSE:AZZ)

Emerson Electric (NYSE: EMR) and AZZ (NYSE:AZZ) are both industrial products companies, but which is the superior investment? We will compare the two companies based on the strength of their profitabiliy, valuation, analyst recommendations, dividends, institutional ownership, risk and earnings.

Dividends

Emerson Electric pays an annual dividend of $1.92 per share and has a dividend yield of 3.2%. AZZ pays an annual dividend of $0.68 per share and has a dividend yield of 1.3%. Emerson Electric pays out 81.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AZZ pays out 33.5% of its earnings in the form of a dividend. Emerson Electric has raised its dividend for 3 consecutive years and AZZ has raised its dividend for 60 consecutive years.

Insider and Institutional Ownership

68.9% of Emerson Electric shares are owned by institutional investors. Comparatively, 86.3% of AZZ shares are owned by institutional investors. 0.8% of Emerson Electric shares are owned by insiders. Comparatively, 0.0% of AZZ shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Emerson Electric and AZZ’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Emerson Electric $14.40 billion 2.70 $3.10 billion $2.35 25.69
AZZ $824.81 million 1.62 $143.90 million $2.03 25.27

Emerson Electric has higher revenue and earnings than AZZ. AZZ is trading at a lower price-to-earnings ratio than Emerson Electric, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Emerson Electric has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500. Comparatively, AZZ has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500.

Profitability

This table compares Emerson Electric and AZZ’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emerson Electric 8.72% 23.37% 9.33%
AZZ 6.44% 10.98% 5.77%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Emerson Electric and AZZ, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emerson Electric 2 12 3 0 2.06
AZZ 0 1 0 0 2.00

Emerson Electric currently has a consensus target price of $56.44, indicating a potential downside of 6.50%. AZZ has a consensus target price of $56.00, indicating a potential upside of 9.16%. Given AZZ’s higher probable upside, analysts plainly believe AZZ is more favorable than Emerson Electric.

Summary

Emerson Electric beats AZZ on 11 of the 17 factors compared between the two stocks.

Emerson Electric Company Profile

Emerson Electric Co. is a diversified global manufacturing company, which provides solutions to customers by bringing technology and engineering together in the industrial, commercial and consumer markets around the world. The Company operates through four segments based on the nature of the products and services rendered: Process Management, Industrial Automation, Climate Technologies and Commercial & Residential Solutions. The Company’s principal production operations are electronics assembly, metal stamping, forming, casting, machining, welding, plating, heat treating, painting and assembly. In addition, the Company uses specialized production operations, including automatic and semiautomatic testing, automated material handling and storage, ferrous and nonferrous machining, and special furnaces for heat treating and foundry applications. The Company provides measurement, control and diagnostic technologies for automated industrial processes.

AZZ Company Profile

AZZ Inc. is a provider of galvanizing services, welding solutions, specialty electrical equipment and engineered services to the power generation, transmission, distribution, refining and industrial markets. The Company operates through two segments: Energy segment and Galvanizing segment. Its Energy segment provides products and services designed to support industrial, nuclear and electrical applications. Its product offerings include custom switchgear, electrical enclosures, medium and high voltage bus ducts, explosion proof and hazardous duty lighting, nuclear safety-related equipment and tubular products. Its Galvanizing segment provides hot dip galvanizing to the steel fabrication industry through facilities located throughout the United States and Canada. It serves fabricators or manufacturers that provide services to the electrical and telecommunications, bridge and highway, petrochemical and general industrial markets and various original equipment manufacturers.

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