Woodward (WWD) and Snap-On (SNA) Critical Contrast

Woodward (NASDAQ: WWD) and Snap-On (NYSE:SNA) are both mid-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, profitability, dividends and risk.

Insider & Institutional Ownership

71.3% of Woodward shares are held by institutional investors. Comparatively, 95.0% of Snap-On shares are held by institutional investors. 5.9% of Woodward shares are held by insiders. Comparatively, 3.7% of Snap-On shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Woodward and Snap-On, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Woodward 0 5 3 0 2.38
Snap-On 0 2 6 0 2.75

Woodward currently has a consensus price target of $74.75, suggesting a potential upside of Infinity. Snap-On has a consensus price target of $192.00, suggesting a potential upside of 21.14%. Given Woodward’s higher probable upside, equities research analysts clearly believe Woodward is more favorable than Snap-On.

Dividends

Woodward pays an annual dividend of $0.50 per share. Snap-On pays an annual dividend of $2.84 per share and has a dividend yield of 1.8%. Woodward pays out 15.8% of its earnings in the form of a dividend. Snap-On pays out 29.1% 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 increased its dividend for 7 consecutive years. Snap-On is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Woodward has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Snap-On has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500.

Valuation & Earnings

This table compares Woodward and Snap-On’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Woodward $2,023.08 0.00 $180.83 $3.17 N/A
Snap-On $3,430.40 2.63 $546.40 $9.75 16.26

Snap-On has higher revenue and earnings than Woodward. Woodward is trading at a lower price-to-earnings ratio than Snap-On, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Woodward and Snap-On’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Woodward 9.67% 16.12% 7.67%
Snap-On 15.95% 20.82% 11.72%

Summary

Snap-On beats Woodward on 11 of the 16 factors compared between the two stocks.

Woodward Company Profile

Woodward, Inc. is an independent designer, manufacturer and service provider of energy control and optimization solutions. The Company designs, produces and services energy control products for various applications. The Company’s segments include Aerospace and Industrial. The Company’s Aerospace segment designs, manufactures and services systems and products for the management of fuel, air, combustion and motion control. The Company’s Industrial segment designs, produces and services systems and products for the management of fuel, air, fluids, gases, electricity, motion and combustion. The Company has production and assembly facilities in the United States, Europe and Asia and South America, and promotes its products and services throughout the world. The Company offers solutions for the aerospace, industrial and energy markets. The Company focuses primarily on serving original equipment manufacturers (OEMs) and equipment packagers.

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.

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