Analyzing DNOW (NYSE:DNOW) & Kadant (NYSE:KAI)

Kadant (NYSE:KAI) and DNOW (NYSE:DNOW) are both mid-cap industrials companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, earnings, dividends, profitability, analyst recommendations, valuation and risk.

Profitability

This table compares Kadant and DNOW’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kadant	9.45%	12.13%	7.33%
DNOW	-4.14%	5.43%	3.44%

Institutional & Insider Ownership

96.1% of Kadant shares are owned by institutional investors. Comparatively, 97.6% of DNOW shares are owned by institutional investors. 1.3% of Kadant shares are owned by company insiders. Comparatively, 1.9% of DNOW shares are owned by company 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.

Valuation & Earnings

This table compares Kadant and DNOW”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kadant	$1.05 billion	3.80	$101.97 million	$8.77	38.65
DNOW	$2.82 billion	0.86	-$89.00 million	($0.73)	-17.92

Kadant has higher earnings, but lower revenue than DNOW. DNOW is trading at a lower price-to-earnings ratio than Kadant, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Kadant has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500. Comparatively, DNOW has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Kadant and DNOW, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kadant	0	2	1	1	2.75
DNOW	2	0	2	0	2.00

Kadant presently has a consensus target price of $341.50, suggesting a potential upside of 0.74%. DNOW has a consensus target price of $17.00, suggesting a potential upside of 29.94%. Given DNOW’s higher possible upside, analysts plainly believe DNOW is more favorable than Kadant.

Summary

Kadant beats DNOW on 10 of the 15 factors compared between the two stocks.

About Kadant

Kadant Inc. supplies technologies and engineered systems worldwide. It operates in three segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment develops, manufactures, and markets fluid-handling systems and equipment, such as rotary joints, syphons, turbulator bars, expansion joints, and engineered steam and condensate systems; and doctoring, cleaning, and filtration systems and related consumables consisting of doctor systems and holders, doctor blades, cleaning shower and fabric-conditioning systems, forming systems and wear surfaces, and water-filtration systems. The Industrial Processing segment develops, manufactures, and markets ring and rotary debarkers, stranders, chippers, engineered knife systems, industrial automation and control, recycling and approach flow systems, and virgin pulping process equipment for use in the packaging, tissue, wood products, and alternative fuel industries. The Material Handling segment offers conveying and vibratory equipment, and baling products; and manufactures and sells biodegradable absorbent granules for carriers in agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption. The company markets and sells its products, services, and systems through direct sales, independent sales agents, and distributors. The company was formerly known as Thermo Fibertek, Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was incorporated in 1991 and is headquartered in Westford, Massachusetts.

About DNOW

DNOW Inc. distributes downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation utilities, and customer on-site locations in the United States, Canada, and internationally. The company provides consumable maintenance, repair, and operating supplies; pipes, manual and automated valves, fittings, flanges, gaskets, fasteners, electrical instrumentations, artificial lift, pumping solutions, valve actuation and modular process, and measurement and control equipment; and mill supplies, tools, safety supplies, and personal protective equipment, as well as artificial lift systems, coatings, and miscellaneous expendable items. It also offers original equipment manufacturer equipment, including pumps, generator sets, air compressors, dryers, blowers, mixers, and valves; modular oil and gas tank battery solutions; and application systems, work processes, parts integration, optimization solutions, and after-sales support services. In addition, the company provides supply chain and materials management; inventory planning and management, procurement, and warehouse management, as well as solutions for logistics, point of issue technology, project management, business process, and performance metrics reporting services. It serves customers in the upstream, midstream, and downstream sectors of the energy industry, including drilling contractors, well-servicing companies, independent and national oil and gas companies, midstream operators, and refineries, as well as petrochemical, chemical, utilities, RNG facilities, and other downstream energy processors; and industrial and manufacturing companies. The company was formerly known as NOW Inc. and changed its name to DNOW Inc. in January 2024. DNOW Inc. was founded in 1862 and is headquartered in Houston, Texas.