Handy & Harman (HNH) versus Schnitzer Steel Industries (SCHN) Critical Contrast

Handy & Harman (NASDAQ: HNH) and Schnitzer Steel Industries (NASDAQ:SCHN) are both small-cap basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, analyst recommendations, risk, institutional ownership, profitability and earnings.

Analyst Recommendations

This is a breakdown of recent ratings for Handy & Harman and Schnitzer Steel Industries, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Handy & Harman 0 0 0 0 N/A
Schnitzer Steel Industries 0 2 0 0 2.00

Schnitzer Steel Industries has a consensus target price of $26.00, indicating a potential downside of 12.01%. Given Schnitzer Steel Industries’ higher possible upside, analysts clearly believe Schnitzer Steel Industries is more favorable than Handy & Harman.

Profitability

This table compares Handy & Harman and Schnitzer Steel Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Handy & Harman 5.07% 27.77% 6.04%
Schnitzer Steel Industries 2.64% 8.49% 4.77%

Dividends

Schnitzer Steel Industries pays an annual dividend of $0.75 per share and has a dividend yield of 2.5%. Handy & Harman does not pay a dividend. Schnitzer Steel Industries pays out 47.2% of its earnings in the form of a dividend.

Risk & Volatility

Handy & Harman has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500. Comparatively, Schnitzer Steel Industries has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500.

Earnings & Valuation

This table compares Handy & Harman and Schnitzer Steel Industries’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Handy & Harman $957.45 million 0.39 $110.27 million $0.71 42.68
Schnitzer Steel Industries $1.58 billion 0.52 $90.43 million $1.59 18.58

Handy & Harman has higher revenue, but lower earnings than Schnitzer Steel Industries. Schnitzer Steel Industries is trading at a lower price-to-earnings ratio than Handy & Harman, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

88.2% of Handy & Harman shares are owned by institutional investors. Comparatively, 83.8% of Schnitzer Steel Industries shares are owned by institutional investors. 6.1% of Handy & Harman shares are owned by insiders. Comparatively, 3.8% of Schnitzer Steel Industries shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Handy & Harman beats Schnitzer Steel Industries on 9 of the 14 factors compared between the two stocks.

About Handy & Harman

Handy & Harman Ltd. is a holding company. The Company, through its subsidiaries, is a diversified manufacturer of engineered industrial products. The Company’s segments include Joining Materials, Tubing, Building Materials, Performance Materials, Electrical Products, and Kasco Blades and Route Repair Services (Kasco). Joining Materials fabricates precious metals and their alloys into brazing alloys. Tubing manufactures a range of steel tubing products. Building Materials manufactures and supplies products to the commercial construction and building industries. Performance Materials manufactures sheet and mechanically formed glass manufactures sheet and mechanically formed glass, quartz, carbon and aramid materials. Electrical Products segment designs, manufactures and markets power electronics and power protection, among others. Kasco provides meat-room blade products, repair services and resale products for the meat and deli departments of supermarkets and restaurants, among others.

About Schnitzer Steel Industries

Schnitzer Steel Industries, Inc. is a recycler of ferrous and nonferrous scrap metal, including end-of-life vehicles, and a manufacturer of finished steel products. The Company operates through two segments: the Auto and Metals Recycling (AMR) business and the Steel Manufacturing Business (SMB). The AMR segment collects and recycles auto bodies, rail cars, home appliances, industrial machinery, manufacturing scrap and construction and demolition scrap from bridges, buildings and other infrastructure. AMR’s primary products include recycled ferrous and nonferrous scrap metal. The SMB segment produces finished steel products such as rebar, wire rod, coiled rebar, merchant bar and other specialty products using 100% recycled metal sourced from AMR. SMB’s products are primarily used in nonresidential and infrastructure construction in North America. SMB operates a steel mini-mill in McMinnville, Oregon that produces finished steel products using recycled metal and other raw materials.

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