Arconic (NYSE: ARNC) and Quanex Building Products (NYSE:NX) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.
Valuation & Earnings
This table compares Arconic and Quanex Building Products’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Arconic||$12.96 billion||0.64||-$74.00 million||$1.22||13.98|
|Quanex Building Products||$866.55 million||0.75||$18.68 million||$0.77||23.96|
Insider and Institutional Ownership
83.5% of Arconic shares are owned by institutional investors. Comparatively, 97.4% of Quanex Building Products shares are owned by institutional investors. 0.2% of Arconic shares are owned by company insiders. Comparatively, 5.3% of Quanex Building Products shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Risk & Volatility
Arconic has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500. Comparatively, Quanex Building Products has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500.
This table compares Arconic and Quanex Building Products’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Quanex Building Products||3.46%||6.77%||3.60%|
Arconic pays an annual dividend of $0.24 per share and has a dividend yield of 1.4%. Quanex Building Products pays an annual dividend of $0.16 per share and has a dividend yield of 0.9%. Arconic pays out 19.7% of its earnings in the form of a dividend. Quanex Building Products pays out 20.8% 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. Arconic is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a breakdown of recent recommendations and price targets for Arconic and Quanex Building Products, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Quanex Building Products||0||3||0||0||2.00|
Arconic presently has a consensus price target of $26.90, suggesting a potential upside of 57.68%. Quanex Building Products has a consensus price target of $25.00, suggesting a potential upside of 35.50%. Given Arconic’s stronger consensus rating and higher probable upside, equities analysts plainly believe Arconic is more favorable than Quanex Building Products.
Arconic beats Quanex Building Products on 9 of the 16 factors compared between the two stocks.
Arconic Company Profile
Arconic Inc. engineers, manufactures, and sells lightweight metals of aluminum, titanium, and nickel worldwide. It operates through three segments: Engineered Products and Solutions, Global Rolled Products, and Transportation and Construction Solutions. The Engineered Products and Solutions produces and sells fastening systems and seamless rolled rings; investment castings, including airfoils and forged jet engine components; and extruded, machined, and formed aircraft parts, as well as various forged, extruded, and machined metal products. This segment serves commercial and defense aerospace, commercial transportation, and power generation end markets. The Global Rolled Products segment produces and sells aluminum sheets and plates; and aseptic foils. This segment serves commercial and defense aerospace, commercial transportation, and power generation end markets. The Transportation and Construction Solutions segment produces and sells integrated aluminum structural systems, architectural extrusions, and forged aluminum commercial vehicle wheels, as well as aluminum products for the industrial products end market. This segment serves nonresidential building and construction, and commercial transportation end markets. The company sells its products directly to customers and through distributors. Arconic Inc. was founded in 2016 and is based in New York, New York.
Quanex Building Products Company Profile
Quanex Building Products Corporation, together with its subsidiaries, provides components for the fenestration industry worldwide. It operates through three segments: North American Engineered Components, European Engineered Components, and North American Cabinet Components. The company offers flexible insulating glass spacers; extruded vinyl profiles; window and door screens; cabinet doors and other components for original equipment manufacturers (OEMs) in the kitchen and bathroom cabinet industry; and precision-formed metal and wood products, as well as solar panel sealants, trim moldings, vinyl decking and fencing products, water retention barriers, and conservatory roof components. It sells its products to OEMs in the building products industry through sales representatives, direct sales force, distributors, and independent sales agents. The company is headquartered in Houston, Texas.
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