Critical Analysis: AZZ (NYSE:AZZ) vs. Kingspan Group (OTCMKTS:KGSPF)

AZZ (NYSE:AZZ) and Kingspan Group (OTCMKTS:KGSPF) are both industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares AZZ and Kingspan Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AZZ	11.83%	14.18%	8.48%
Kingspan Group	N/A	N/A	N/A

Institutional and Insider Ownership

90.9% of AZZ shares are held by institutional investors. Comparatively, 46.6% of Kingspan Group shares are held by institutional investors. 1.7% of AZZ shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

AZZ pays an annual dividend of $0.96 per share and has a dividend yield of 0.7%. Kingspan Group pays an annual dividend of $0.09 per share and has a dividend yield of 0.1%. AZZ pays out 14.6% of its earnings in the form of a dividend. Kingspan Group pays out 15.0% 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. AZZ is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares AZZ and Kingspan Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AZZ	$1.68 billion	2.41	$317.26 million	$6.56	20.54
Kingspan Group	N/A	N/A	N/A	$0.57	211.47

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

Analyst Ratings

This is a summary of recent recommendations and price targets for AZZ and Kingspan Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AZZ	0	2	4	0	2.67
Kingspan Group	0	0	0	0	0.00

AZZ presently has a consensus target price of $155.25, suggesting a potential upside of 15.23%. Given AZZ’s stronger consensus rating and higher possible upside, research analysts clearly believe AZZ is more favorable than Kingspan Group.

Summary

AZZ beats Kingspan Group on 12 of the 13 factors compared between the two stocks.

About AZZ

AZZ Inc. provides hot-dip galvanizing and coil coating solutions in North America. It offers metal finishing solutions for corrosion protection, including hot-dip galvanizing, spin galvanizing, powder coating, anodizing, and plating to steel fabrication and other industries, as well as to fabricators or manufacturers that provide services to the transmission and distribution, bridge and highway, petrochemical, and general industrial markets; and original equipment manufacturers. It also provides aesthetic and corrosion protective coatings and related value-added services for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation, and air conditioning; container; transportation; and other end markets. The company was incorporated in 1956 and is headquartered in Fort Worth, Texas.

About Kingspan Group

Kingspan Group plc, together with its subsidiaries, provides insulation and building envelope solutions in Western and Southern Europe, Central and Northern Europe, the Americas, and internationally. It operates through five segments: Insulated Panels, Insulation, Roofing + Waterproofing, Light, Air + Water, and Data + Flooring. The Insulated Panels segment manufactures insulated panels, structural framing, and metal facades. The Insulation segment produces rigid insulation boards, technical insulation, and engineered timber systems. The Roofing + Waterproofing segment produces roofing and waterproofing solutions for renovation and new construction of buildings. The Light, Air + Water segment offers daylighting, smoke management, ventilation systems, and service activities, as well as provides energy and water solutions, and related services. The Data + Flooring segment manufactures data center storage solutions, as well as raised access floors. Kingspan Group plc was founded in 1965 and is based in Kingscourt, Ireland.