Critical Contrast: Ampco-Pittsburgh Corporation (NYSE:AP) versus Graco (GGG)

Ampco-Pittsburgh Corporation (NYSE: AP) and Graco (NYSE:GGG) are both industrial products companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, profitabiliy, analyst recommendations and earnings.

Dividends

Ampco-Pittsburgh Corporation pays an annual dividend of $0.36 per share and has a dividend yield of 2.7%. Graco pays an annual dividend of $1.44 per share and has a dividend yield of 1.3%. Ampco-Pittsburgh Corporation pays out -5.7% of its earnings in the form of a dividend. Graco pays out 92.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Graco has increased its dividend for 12 consecutive years. Ampco-Pittsburgh Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Ampco-Pittsburgh Corporation has a beta of 1.55, meaning that its share price is 55% more volatile than the S&P 500. Comparatively, Graco has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Ampco-Pittsburgh Corporation and Graco, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ampco-Pittsburgh Corporation	0	1	0	0	2.00
Graco	0	4	0	0	2.00

Ampco-Pittsburgh Corporation currently has a consensus price target of $16.00, suggesting a potential upside of 19.40%. Graco has a consensus price target of $101.00, suggesting a potential downside of 11.91%. Given Ampco-Pittsburgh Corporation’s higher probable upside, research analysts clearly believe Ampco-Pittsburgh Corporation is more favorable than Graco.

Insider and Institutional Ownership

56.5% of Ampco-Pittsburgh Corporation shares are owned by institutional investors. Comparatively, 91.0% of Graco shares are owned by institutional investors. 29.9% of Ampco-Pittsburgh Corporation shares are owned by insiders. Comparatively, 5.7% of Graco shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Ampco-Pittsburgh Corporation and Graco’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Ampco-Pittsburgh Corporation	$371.80 million	0.44	$3.04 million	($6.31)	-2.12
Graco	$1.40 billion	4.59	$397.35 million	$1.55	73.97

Graco has higher revenue and earnings than Ampco-Pittsburgh Corporation. Ampco-Pittsburgh Corporation is trading at a lower price-to-earnings ratio than Graco, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ampco-Pittsburgh Corporation and Graco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ampco-Pittsburgh Corporation	-20.83%	-24.28%	-7.55%
Graco	6.50%	40.21%	18.93%

Summary

Graco beats Ampco-Pittsburgh Corporation on 9 of the 14 factors compared between the two stocks.

About Ampco-Pittsburgh Corporation

Ampco-Pittsburgh Corporation is engaged in manufacturing and selling specialty metal products and customized equipment utilized by industry throughout the world. The Company operates through two segments: the Forged and Cast Engineered Products segment, and the Air and Liquid Processing segment. The Forged and Cast Engineered Products segment consists of Union Electric Steel Corporation (Union Electric Steel or UES) and Union Electric Steel UK Limited (UES-UK). The Air and Liquid Processing segment includes Aerofin, Buffalo Air Handling and Buffalo Pumps, all divisions of Air & Liquid Systems Corporation (Air and Liquid), a subsidiary of the Company. Union Electric Steel produces ingot and forged products that service a range of industries across the globe. UES-UK produces cast rolls for hot and cold strip mills, medium/heavy section mills and plate mills in a range of iron and steel qualities.

About Graco

Graco Inc. designs, manufactures and markets systems and equipment used to move, measure, control, dispense and spray fluid and powder materials. The Company specializes in equipment for applications that involve materials with viscosities, materials with abrasive or corrosive properties, and multiple-component materials that require ratio control. The Company operates through three segments: Industrial, Process and Contractor. The Industrial segment markets equipment and pre-engineered packages for moving and applying paints, coatings, sealants, adhesives and other fluids. The Process segment markets pumps, valves, meters and accessories to move and dispense chemicals, oil and natural gas, water, wastewater, petroleum, food, lubricants and other fluids. The Contractor segment markets sprayers for architectural coatings for painting, corrosion control, texture and line striping. Its equipment is used in the manufacturing, processing, construction and maintenance industries.