Head-To-Head Analysis: A. O. Smith (NYSE:AOS) and Tecnoglass (NYSE:TGLS)

A. O. Smith (NYSE:AOS) and Tecnoglass (NYSE:TGLS) are both industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.

Profitability

This table compares A. O. Smith and Tecnoglass’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
A. O. Smith	13.15%	27.88%	15.21%
Tecnoglass	12.35%	17.84%	10.14%

Earnings & Valuation

This table compares A. O. Smith and Tecnoglass”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
A. O. Smith	$3.83 billion	2.15	$546.20 million	$3.60	16.80
Tecnoglass	$983.61 million	1.78	$159.57 million	$2.84	13.87

A. O. Smith has higher revenue and earnings than Tecnoglass. Tecnoglass is trading at a lower price-to-earnings ratio than A. O. Smith, indicating that it is currently the more affordable of the two stocks.

Dividends

A. O. Smith pays an annual dividend of $1.44 per share and has a dividend yield of 2.4%. Tecnoglass pays an annual dividend of $0.60 per share and has a dividend yield of 1.5%. A. O. Smith pays out 40.0% of its earnings in the form of a dividend. Tecnoglass pays out 21.1% 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. A. O. Smith has increased its dividend for 31 consecutive years and Tecnoglass has increased its dividend for 4 consecutive years. A. O. Smith is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for A. O. Smith and Tecnoglass, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
A. O. Smith	2	5	2	0	2.00
Tecnoglass	0	2	3	0	2.60

A. O. Smith presently has a consensus target price of $67.75, suggesting a potential upside of 12.00%. Tecnoglass has a consensus target price of $63.33, suggesting a potential upside of 60.83%. Given Tecnoglass’ stronger consensus rating and higher probable upside, analysts clearly believe Tecnoglass is more favorable than A. O. Smith.

Insider & Institutional Ownership

76.1% of A. O. Smith shares are owned by institutional investors. Comparatively, 37.3% of Tecnoglass shares are owned by institutional investors. 0.5% of A. O. Smith shares are owned by insiders. Comparatively, 0.1% of Tecnoglass shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

A. O. Smith beats Tecnoglass on 12 of the 16 factors compared between the two stocks.

About A. O. Smith

A. O. Smith Corporation manufactures and markets residential and commercial gas and electric water heaters, boilers, heat pumps, tanks, and water treatment products in North America, China, Europe, and India. The company offers water heaters for residences, restaurants, hotels, office buildings, laundries, car washes, and small businesses; boilers for hospitals, schools, hotels, and other large commercial buildings, as well as homes, apartments, and condominiums; and water treatment products comprising point-of-entry water softeners, well water solutions, and whole-home water filtration products, and point-of-use carbon and reverse osmosis products for residences, restaurants, hotels, and offices. It also provides commercial water treatment and filtration product; expansion tanks, commercial solar water heating systems, swimming pool and spa heaters, and related products and parts; and electric wall-hung, gas tankless, combi-boiler, and heat pump and solar water heaters. The company offers its products under the A. O. Smith, State, Lochinvar, Hague, Water-Right, Master Water, Atlantic Filter, and Water Tec brands. It distributes its products through independent wholesale plumbing distributors, as well as to retail channels consisting of hardware and home center chains, and manufacturer representative firms; and offers Aquasana branded products directly to consumers through e-commerce channels. A. O. Smith Corporation was founded in 1874 and is headquartered in Milwaukee, Wisconsin.

About Tecnoglass

Tecnoglass Inc., through its subsidiaries, designs, produces, markets, and installs architectural systems for the commercial and residential construction industries in Colombia, the United States, Panama, and internationally. The company offers low emissivity, laminated/thermo-laminated, thermo-acoustic, tempered, silk-screened, curved, and digital print glass products. It also provides aluminum products, including bars, plates, profiles, rods, and tubes that are used in the manufacture of architectural glass settings, such as windows, doors, spatial separators, and related products. In addition, the company offers curtain wall/floating facades, windows and doors, interior dividers and commercial display windows, hurricane-proof windows, and stick facade systems; and other products comprising awnings, structures, automatic doors, and other components of architectural systems. It markets and sells its products primarily under the Tecnoglass, ESWindows, and Alutions brands through internal and independent sales representatives, as wells as directly to distributors. The company was founded in 1984 and is headquartered in Barranquilla, Colombia. Tecnoglass Inc. is a subsidiary of Energy Holding Corporation.