Analyzing Synalloy (SYNL) and Commercial Metals (CMC)

Synalloy (NASDAQ: SYNL) and Commercial Metals (NYSE:CMC) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, institutional ownership and risk.

Analyst Ratings

This is a summary of recent ratings and price targets for Synalloy and Commercial Metals, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Synalloy 0 0 0 0 N/A
Commercial Metals 2 0 5 0 2.43

Commercial Metals has a consensus target price of $21.57, suggesting a potential downside of 14.02%. Given Commercial Metals’ higher possible upside, analysts clearly believe Commercial Metals is more favorable than Synalloy.

Volatility & Risk

Synalloy has a beta of 0.14, suggesting that its share price is 86% less volatile than the S&P 500. Comparatively, Commercial Metals has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500.

Valuation and Earnings

This table compares Synalloy and Commercial Metals’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Synalloy $138.57 million 0.83 -$7.09 million ($0.13) -101.15
Commercial Metals $4.57 billion 0.64 $46.33 million $0.54 46.46

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

Institutional & Insider Ownership

48.2% of Synalloy shares are owned by institutional investors. Comparatively, 88.6% of Commercial Metals shares are owned by institutional investors. 10.6% of Synalloy shares are owned by company insiders. Comparatively, 1.5% of Commercial Metals shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Synalloy pays an annual dividend of $0.13 per share and has a dividend yield of 1.0%. Commercial Metals pays an annual dividend of $0.48 per share and has a dividend yield of 1.9%. Synalloy pays out -100.0% of its earnings in the form of a dividend. Commercial Metals pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Synalloy and Commercial Metals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Synalloy -0.59% 1.85% 1.03%
Commercial Metals 1.53% 8.08% 3.69%

Summary

Commercial Metals beats Synalloy on 12 of the 15 factors compared between the two stocks.

Synalloy Company Profile

Synalloy Corporation is a chemical manufacturing company. The Company operates through two segments: the Metals Segment and the Specialty Chemicals Segment. The Company’s Metals Segment comprises three subsidiaries: Synalloy Metals, Inc., which owns Bristol Metals, LLC (BRISMET), located in Bristol, Tennessee; Palmer of Texas Tanks, Inc. (Palmer), located in Andrews, Texas; and Specialty Pipe & Tube, Inc. (Specialty), located in Mineral Ridge, Ohio and Houston, Texas. The Company’s Metals Segment manufactures stainless steel, other alloy pipe, storage solutions and separation equipment. The Company’s Specialty Chemicals segment consists of the Company’s subsidiary, Manufacturers Soap and Chemical Company (MS&C). The Specialty Chemicals Segment manufactures lubricants, surfactants, reaction intermediaries, sulfated fats and oils, and chemical tolling manufacturing resources.

Commercial Metals Company Profile

Commercial Metals Company, together with its subsidiaries, manufactures, recycles and markets steel and metal products, related materials and services through a network. The Company’s Americas Recycling segment processes scrap metals for use as a raw material by manufacturers of new metal products. The Americas Mills segment consists of steel mills, commonly referred to as minimills that produce reinforcing bar (rebar), angles, flats and rounds. Its Americas Fabrication segment consists of its steel fabrication facilities that bend, weld, cut and fabricate steel, primarily rebar. Its International Mill segment consists of its mill, recycling and fabrication operations located in Poland. Its International Marketing and Distribution segment includes international operations for the sales, distribution and processing of primary and secondary metals, fabricated metals, semi-finished, long and flat steel products, and other industrial products.

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