Contrasting Sandvik (OTCMKTS:SDVKY) and Snap-On (NYSE:SNA)

Snap-On (NYSE:SNA) and Sandvik (OTCMKTS:SDVKY) are both large-cap industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, institutional ownership, valuation and dividends.

Insider and Institutional Ownership

84.9% of Snap-On shares are owned by institutional investors. Comparatively, 0.7% of Sandvik shares are owned by institutional investors. 3.8% of Snap-On shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings for Snap-On and Sandvik, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Snap-On	0	1	5	0	2.83
Sandvik	1	8	3	1	2.31

Snap-On presently has a consensus price target of $429.20, suggesting a potential upside of 18.00%. Given Snap-On’s stronger consensus rating and higher possible upside, research analysts clearly believe Snap-On is more favorable than Sandvik.

Earnings and Valuation

This table compares Snap-On and Sandvik”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Snap-On	$4.74 billion	3.97	$1.02 billion	$19.61	18.55
Sandvik	$12.34 billion	3.74	$1.50 billion	$1.45	25.39

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

Dividends

Snap-On pays an annual dividend of $9.76 per share and has a dividend yield of 2.7%. Sandvik pays an annual dividend of $0.42 per share and has a dividend yield of 1.1%. Snap-On pays out 49.8% of its earnings in the form of a dividend. Sandvik pays out 29.0% 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 raised its dividend for 15 consecutive years. Snap-On is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Snap-On	21.25%	17.07%	12.00%
Sandvik	13.05%	18.45%	9.99%

Risk and Volatility

Snap-On has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, Sandvik has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500.

Summary

Snap-On beats Sandvik on 11 of the 18 factors compared between the two stocks.

About Snap-On

Snap-on Incorporated manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users worldwide. It operates through Commercial & Industrial Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services segments. The company provides hand tools, including wrenches, sockets, ratchet wrenches, pliers, screwdrivers, punches and chisels, saws and cutting tools, pruning tools, torque measuring instruments, and other related products; power tools, such as cordless, pneumatic, and hydraulic and corded tools; and tool storage products comprising tool chests, roll cabinets, and other products. It provides handheld and computer-based diagnostic products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer purchasing facilitation services, and warranty management systems and analytics; and engineered solutions. In addition, the company offers solutions for the service of vehicles and industrial equipment that include wheel alignment equipment, wheel balancers, tire changers, vehicle lifts, test lane equipment, collision repair equipment, vehicle air conditioning service equipment, brake service equipment, fluid exchange equipment, transmission troubleshooting equipment, safety testing equipment, battery chargers, and hoists, as well as after-sales support services and training programs. Further, it provides financing programs to facilitate the sales of its products and support its franchise business. It serves the aviation and aerospace, agriculture, infrastructure construction, government and military, mining, natural resources, power generation, and technical education industries. Snap-on Incorporated was incorporated in 1920 and is headquartered in Kenosha, Wisconsin.

About Sandvik

Sandvik AB (publ), an engineering company, provides products and solutions for mining and rock excavation, metal cutting, and materials technology worldwide. The company offers mining and rock excavation equipment, including drill rigs and bolters, underground loaders and trucks, mechanical cutting equipment, rock tools and rock drills, and mining automation; rock processing equipment, such as crushers, screens, hydraulic breakers, demolition tools, and breaker booms. It also provides metal-cutting tools and tooling systems, and digital solutions and software; metal powder for additive manufacturing, and components made from controlled expansion alloys; and tungsten powders, as well as recycling services of secondary tungsten raw materials. The company serves aerospace, automotive, energy, general engineering, infrastructure, and mining industries. Sandvik AB (publ) was founded in 1862 and is headquartered in Stockholm, Sweden.