Snap-On (NYSE: SNA) and Timken Company (The) (NYSE:TKR) are both mid-cap consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, profitability, earnings, analyst recommendations and risk.
Institutional and Insider Ownership
93.3% of Snap-On shares are held by institutional investors. Comparatively, 76.9% of Timken Company (The) shares are held by institutional investors. 3.7% of Snap-On shares are held by company insiders. Comparatively, 11.1% of Timken Company (The) shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Snap-On and Timken Company (The)’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Snap-On||$3.83 billion||2.28||$971.00 million||$9.68||15.65|
|Timken Company (The)||$2.77 billion||1.22||$385.30 million||$2.09||20.81|
Snap-On has higher revenue and earnings than Timken Company (The). Snap-On is trading at a lower price-to-earnings ratio than Timken Company (The), indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Snap-On has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500. Comparatively, Timken Company (The) has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500.
This is a breakdown of current recommendations for Snap-On and Timken Company (The), as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Timken Company (The)||0||3||2||0||2.40|
Snap-On presently has a consensus target price of $197.00, indicating a potential upside of 30.02%. Timken Company (The) has a consensus target price of $45.20, indicating a potential upside of 3.91%. Given Snap-On’s stronger consensus rating and higher probable upside, analysts plainly believe Snap-On is more favorable than Timken Company (The).
Snap-On pays an annual dividend of $2.84 per share and has a dividend yield of 1.9%. Timken Company (The) pays an annual dividend of $1.08 per share and has a dividend yield of 2.5%. Snap-On pays out 29.3% of its earnings in the form of a dividend. Timken Company (The) pays out 51.7% 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. Snap-On has raised its dividend for 7 consecutive years and Timken Company (The) has raised its dividend for 3 consecutive years.
This table compares Snap-On and Timken Company (The)’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Timken Company (The)||5.98%||12.73%||5.96%|
Snap-On beats Timken Company (The) on 13 of the 17 factors compared between the two stocks.
Snap-On Company Profile
Snap-on Incorporated is a manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions. The Company’s segments include the Commercial & Industrial Group, the Snap-on Tools Group, the Repair Systems & Information Group, and Financial Services. The Commercial & Industrial Group consists of business operations serving a range of industrial and commercial customers, including customers in the aerospace, natural resources, government, power generation, transportation and technical education markets. The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians. The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers, primarily owners and managers of independent repair shops and original equipment manufacturer (OEM) dealership service and repair shops. Financial Services consists of the business operations of its finance subsidiaries.
Timken Company (The) Company Profile
The Timken Company engineers, manufactures and markets bearings, transmissions, gearboxes, belts, chain, couplings and related products and offers a spectrum of power system rebuild and repair services across the world. The Company operates through two segments: Mobile Industries and Process Industries. Its Mobile Industries segment offers a portfolio of bearings, seals, lubrication devices and systems, as well as power transmission components, engineered chain, augers, belts and related products and maintenance services to original equipment manufacturers (OEMs) and end users of off-highway equipment for the agricultural, construction, mining, outdoor power equipment and powersports markets; on-highway vehicles, including passenger cars, light trucks and medium- and heavy-duty trucks; rail cars, and locomotives. Its Process Industries segment supplies industrial bearings and assemblies, power transmission components, and related products and services to OEMs and end users.
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