Financial Comparison: Mueller Industries (NYSE:MLI) vs. Caterpillar (NYSE:CAT)

Mueller Industries (NYSE:MLI) and Caterpillar (NYSE:CAT) are both large-cap industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Profitability

This table compares Mueller Industries and Caterpillar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mueller Industries	18.25%	25.68%	21.80%
Caterpillar	14.51%	55.53%	11.38%

Institutional and Insider Ownership

94.5% of Mueller Industries shares are owned by institutional investors. Comparatively, 71.0% of Caterpillar shares are owned by institutional investors. 2.3% of Mueller Industries shares are owned by company insiders. Comparatively, 0.3% of Caterpillar shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Mueller Industries pays an annual dividend of $0.70 per share and has a dividend yield of 1.2%. Caterpillar pays an annual dividend of $6.52 per share and has a dividend yield of 0.8%. Mueller Industries pays out 18.2% of its earnings in the form of a dividend. Caterpillar pays out 28.1% 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. Mueller Industries has raised its dividend for 5 consecutive years and Caterpillar has raised its dividend for 30 consecutive years. Mueller Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Mueller Industries and Caterpillar”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mueller Industries	$4.18 billion	3.19	$765.19 million	$3.84	15.68
Caterpillar	$67.59 billion	5.53	$8.88 billion	$23.24	34.98

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Mueller Industries and Caterpillar, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mueller Industries	0	0	2	0	3.00
Caterpillar	0	12	15	0	2.56

Mueller Industries presently has a consensus target price of $75.00, suggesting a potential upside of 24.57%. Caterpillar has a consensus target price of $989.17, suggesting a potential upside of 21.66%. Given Mueller Industries’ stronger consensus rating and higher possible upside, equities analysts plainly believe Mueller Industries is more favorable than Caterpillar.

Risk & Volatility

Mueller Industries has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500. Comparatively, Caterpillar has a beta of 1.58, suggesting that its stock price is 58% more volatile than the S&P 500.

Summary

Caterpillar beats Mueller Industries on 9 of the 17 factors compared between the two stocks.

About Mueller Industries

Mueller Industries, Inc. manufactures and sells copper, brass, aluminum, and plastic products in the United States, the United Kingdom, Canada, South Korea, the Middle East, China, and Mexico. It operates through three segments: Piping Systems, Industrial Metals, and Climate. The Piping Systems segment offers copper tubes, fittings, line sets, and pipe nipples. It also resells steel pipes, brass and plastic plumbing valves, malleable iron fittings and faucets, and plumbing specialties; and supplies water tubes. This segment sells its products to wholesalers in the plumbing and refrigeration markets, distributors to the manufactured housing and recreational vehicle industries, building material retailers, and air-conditioning original equipment manufacturers (OEMs). The Industrial Metals segment manufactures brass, bronze, and copper alloy rods; plumbing brass, valves, fittings, and gas assemblies; cold-form aluminum and copper products; machining of aluminum, steel, brass, and cast iron impacts and castings; brass and aluminum forgings; brass, aluminum, and stainless-steel valves; fluid control solutions; and gas train assembles to OEMs in the industrial, construction, HVAC, plumbing, and refrigeration markets. The Climate segment offers valves, protection devices, and brass fittings for various OEMs in the commercial HVAC and refrigeration markets; high-pressure components and accessories for the air-conditioning and refrigeration markets; coaxial heat exchangers and twisted tubes for the HVAC, geothermal, refrigeration, swimming pool heat pump, marine, ice machine, commercial boiler, and heat reclamation markets; and insulated HVAC flexible duct systems. Mueller Industries, Inc. was founded in 1917 and is headquartered in Collierville, Tennessee.

About Caterpillar

Caterpillar Inc. manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives in worldwide. Its Construction Industries segment offers asphalt pavers, compactors, road reclaimers, forestry machines, cold planers, material handlers, track-type tractors, excavators, telehandlers, motor graders, and pipelayers; compact track, wheel, track-type, backhoe, and skid steer loaders; and related parts and tools. The company's Resource Industries segment provides electric rope and hydraulic shovels, draglines, rotary drills, hard rock vehicles, tractors, mining trucks, wheel loaders, off-highway and articulated trucks, wheel tractor scrapers and dozers, fleet management products, landfill and soil compactors, machinery components, autonomous ready vehicles and solutions, work tools, and safety services and mining performance solutions, as well as related parts and services. Its Energy & Transportation segment offers reciprocating engine powered generator sets; reciprocating engines, drivetrain, and integrated systems and solutions; turbines, centrifugal gas compressors, and related services; and diesel-electric locomotives and components, and other rail-related products. The company's Financial Products segment provides operating and finance leases, installment sale contracts, revolving charge accounts, repair/rebuild financing services, working capital loans, and wholesale financing; and insurance and risk management products and services. Its All Other Operating segment offers filters and fluids, undercarriage, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components; parts distribution; logistics solutions and distribution services; brand management and marketing strategy services; and digital investments services. Caterpillar Inc. was founded in 1925 and is headquartered in Irving, Texas.