Reviewing Toromont Industries (OTCMKTS:TMTNF) and Karat Packaging (NASDAQ:KRT)

Toromont Industries (OTCMKTS:TMTNF) and Karat Packaging (NASDAQ:KRT) are both industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Insider and Institutional Ownership

25.2% of Karat Packaging shares are held by institutional investors. 57.9% of Karat Packaging shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for Toromont Industries and Karat Packaging, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Toromont Industries	0	3	4	0	2.57
Karat Packaging	1	2	3	0	2.33

Karat Packaging has a consensus target price of $36.50, suggesting a potential downside of 22.24%. Given Karat Packaging’s higher probable upside, analysts clearly believe Karat Packaging is more favorable than Toromont Industries.

Dividends

Toromont Industries pays an annual dividend of $1.62 per share and has a dividend yield of 1.1%. Karat Packaging pays an annual dividend of $1.88 per share and has a dividend yield of 4.0%. Toromont Industries pays out 49.4% of its earnings in the form of a dividend. Karat Packaging pays out 75.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Karat Packaging has increased its dividend for 2 consecutive years. Karat Packaging is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Toromont Industries and Karat Packaging’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Toromont Industries	9.25%	15.53%	9.42%
Karat Packaging	10.18%	30.62%	16.67%

Earnings and Valuation

This table compares Toromont Industries and Karat Packaging”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Toromont Industries	$3.72 billion	3.21	$355.41 million	$3.28	44.66
Karat Packaging	$493.38 million	1.90	$31.48 million	$2.50	18.78

Toromont Industries has higher revenue and earnings than Karat Packaging. Karat Packaging is trading at a lower price-to-earnings ratio than Toromont Industries, indicating that it is currently the more affordable of the two stocks.

About Toromont Industries

Toromont Industries Ltd. provides specialized capital equipment in Canada, the United States, and internationally. It operates in two segments, Equipment Group and CIMCO. The Equipment Group segment engages in the sale, rental, and service of mobile equipment for Caterpillar and other manufacturers; sale, rental, and service of engines used in various applications, including industrial, commercial, marine, on-highway trucks, and power generation; and sale of complementary and related products, parts, and services. This segment serves road building, mining, aggregates, infrastructure, residential and commercial construction, power generation, agriculture, forestry, and waste management markets. The CIMCO segment is involved in the design, engineering, fabrication, installation, and after-sale support of refrigeration systems in industrial and recreational markets. This segment primarily serves beverage and food processing, cold storage, food distribution, mining, and recreational ice rink sectors. Toromont Industries Ltd. was founded in 1961 and is headquartered in Concord, Canada.

About Karat Packaging

Karat Packaging Inc., together with its subsidiaries, engages in the manufacture and distribution of single-use disposable products in plastic, paper, biopolymer-based, and other compostable forms used in various restaurant and foodservice settings. It provides food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves, and other products under the Karat Earth brand. The company also provides new product development, design, printing, and logistics services. It offers its products to national and regional distributors, restaurant chains, retail establishments, and online customers. The company was founded in 2000 and is based in Chino, California.