NL Industries (NYSE: NL) and Orbotech (NASDAQ:ORBK) are both small-cap basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitabiliy, earnings, valuation, analyst recommendations, dividends, risk and institutional ownership.
Profitability
This table compares NL Industries and Orbotech’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| NL Industries | 23.55% | 13.97% | 6.94% |
| Orbotech | 9.78% | 14.87% | 10.12% |
Institutional and Insider Ownership
6.4% of NL Industries shares are owned by institutional investors. Comparatively, 71.6% of Orbotech shares are owned by institutional investors. 0.1% of NL Industries shares are owned by insiders. Comparatively, 10.4% of Orbotech shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Volatility & Risk
NL Industries has a beta of 2.67, meaning that its share price is 167% more volatile than the S&P 500. Comparatively, Orbotech has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current ratings and target prices for NL Industries and Orbotech, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| NL Industries | 1 | 0 | 0 | 0 | 1.00 |
| Orbotech | 0 | 1 | 5 | 0 | 2.83 |
NL Industries presently has a consensus target price of $6.00, indicating a potential downside of 19.46%. Orbotech has a consensus target price of $37.50, indicating a potential upside of 5.54%. Given Orbotech’s stronger consensus rating and higher possible upside, analysts clearly believe Orbotech is more favorable than NL Industries.
Earnings & Valuation
This table compares NL Industries and Orbotech’s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| NL Industries | $111.79 million | 3.25 | $6.88 million | $0.54 | 13.80 |
| Orbotech | $803.62 million | 2.12 | $154.54 million | $1.65 | 21.53 |
Orbotech has higher revenue and earnings than NL Industries. NL Industries is trading at a lower price-to-earnings ratio than Orbotech, indicating that it is currently the more affordable of the two stocks.
Summary
Orbotech beats NL Industries on 11 of the 14 factors compared between the two stocks.
About NL Industries
NL Industries, Inc. is a holding company. The Company operates in the component products industry through its subsidiary, CompX International Inc. (CompX). The Company operates in the chemicals industry through its non-controlling interest in Kronos Worldwide, Inc. (Kronos). The Company, through Compx, manufactures engineered components that are sold to a range of industries, including recreational transportation (including boats), postal, office and institutional furniture, cabinetry, tool storage, healthcare, gas stations and vending equipment. Kronos is a global producer and marketer of value-added titanium dioxide pigments (TiO2), a base industrial product used in imparting whiteness, brightness and opacity to a range of customer applications and end use markets, including coatings, plastics, paper, inks, food, cosmetics, and other industrial and consumer products. Kronos has production facilities in Europe and North America.
About Orbotech
Orbotech Ltd. is a supplier of yield-enhancing and process-enabling solutions for the manufacture of electronics products. The Company provides cutting-edge solutions for use in the manufacture of printed circuit boards (PCBs), flat panel displays (FPDs) and semiconductor devices (SDs). The Company’s segments include Production Solutions for the Electronics Industry, Solar Energy and Recognition Software. The Production Solutions for the Electronics Industry segment is engaged in the design, development, manufacture, marketing and service of yield-enhancing and process-enabling solutions for the manufacture of electronics products. The Solar Energy segment is engaged in the design, development, manufacture and marketing of solar photovoltaic energy systems that produce electricity directly from sunlight. The Recognition Software segment is engaged in the development and marketing of check processing and healthcare payment automation solutions.
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