MSC Industrial Direct (NYSE: MSM) and Kadant (NYSE:KAI) are both industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, analyst recommendations, valuation, earnings and risk.
This is a breakdown of current recommendations and price targets for MSC Industrial Direct and Kadant, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|MSC Industrial Direct||1||10||4||0||2.20|
MSC Industrial Direct currently has a consensus target price of $90.17, suggesting a potential upside of 29.70%. Kadant has a consensus target price of $72.00, suggesting a potential downside of 15.59%. Given MSC Industrial Direct’s higher probable upside, analysts plainly believe MSC Industrial Direct is more favorable than Kadant.
Valuation and Earnings
This table compares MSC Industrial Direct and Kadant’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|MSC Industrial Direct||$2.88 billion||1.09||$443.59 million||$3.99||17.42|
|Kadant||$418.86 million||2.24||$67.05 million||$3.03||28.15|
MSC Industrial Direct has higher revenue and earnings than Kadant. MSC Industrial Direct is trading at a lower price-to-earnings ratio than Kadant, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
78.0% of MSC Industrial Direct shares are owned by institutional investors. Comparatively, 89.1% of Kadant shares are owned by institutional investors. 31.3% of MSC Industrial Direct shares are owned by company insiders. Comparatively, 5.6% of Kadant shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Risk & Volatility
MSC Industrial Direct has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, Kadant has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500.
MSC Industrial Direct pays an annual dividend of $1.80 per share and has a dividend yield of 2.6%. Kadant pays an annual dividend of $0.84 per share and has a dividend yield of 1.0%. MSC Industrial Direct pays out 45.1% of its earnings in the form of a dividend. Kadant pays out 27.7% 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. MSC Industrial Direct has raised its dividend for 3 consecutive years and Kadant has raised its dividend for 6 consecutive years.
This table compares MSC Industrial Direct and Kadant’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|MSC Industrial Direct||8.07%||20.05%||11.38%|
MSC Industrial Direct Company Profile
MSC Industrial Direct Co., Inc. is a North American distributor of metalworking and maintenance, repair and operations (MRO) products and services. The Company’s range of MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components and electrical supplies. The Company serves a range of customers throughout the United States, Canada and the United Kingdom, from individual machine shops, to manufacturing companies, to government agencies, such as the General Services Administration and the Department of Defense. The Company also serves durable and non-durable goods manufacturing, education and healthcare markets, among others. As of September 3, 2016, the Company had operated a network of 12 customer fulfillment centers.
Kadant Company Profile
Kadant Inc. is a supplier of equipment and components used in process industries. In addition, the Company manufactures granules made from papermaking by-products. Its segments include Papermaking Systems and Wood Processing Systems. The Company has a customer base, which includes paper and oriented strand board (OSB) manufacturers. Papermaking Systems segment is engaged in developing, manufacturing, and marketing equipment for the global papermaking and paper recycling industries. Its Papermaking Systems segment consists of product lines, including Stock-Preparation; Doctoring, Cleaning, & Filtration, and Fluid-Handling. The Company develops, manufactures and markets stranders and related equipment used in the production of OSB.
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