Contrasting Alamo Group (NYSE:ALG) and AB SKF (OTCMKTS:SKFRY)

Alamo Group (NYSE:ALG) and AB SKF (OTCMKTS:SKFRY) are both industrials companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, valuation, institutional ownership and risk.

Profitability

This table compares Alamo Group and AB SKF’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alamo Group	6.08%	9.83%	6.86%
AB SKF	5.05%	13.27%	6.91%

Risk & Volatility

Alamo Group has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500. Comparatively, AB SKF has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Alamo Group and AB SKF, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alamo Group	0	3	1	1	2.60
AB SKF	1	4	1	0	2.00

Alamo Group presently has a consensus price target of $188.00, suggesting a potential upside of 25.44%. Given Alamo Group’s stronger consensus rating and higher probable upside, research analysts plainly believe Alamo Group is more favorable than AB SKF.

Dividends

Alamo Group pays an annual dividend of $1.36 per share and has a dividend yield of 0.9%. AB SKF pays an annual dividend of $0.59 per share and has a dividend yield of 2.2%. Alamo Group pays out 16.3% of its earnings in the form of a dividend. AB SKF pays out 55.7% 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. Alamo Group has increased its dividend for 14 consecutive years.

Insider and Institutional Ownership

92.4% of Alamo Group shares are held by institutional investors. Comparatively, 0.1% of AB SKF shares are held by institutional investors. 1.1% of Alamo Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Alamo Group and AB SKF”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alamo Group	$1.66 billion	1.10	$103.80 million	$8.34	17.97
AB SKF	$9.36 billion	1.33	$401.34 million	$1.06	25.78

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

Summary

Alamo Group beats AB SKF on 9 of the 17 factors compared between the two stocks.

About Alamo Group

Alamo Group Inc. designs, manufactures, distributes, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural uses worldwide. It operates through two segments, Vegetation Management and Industrial Equipment. Its Vegetation Management Division segment offers hydraulically-powered and tractor – and off-road chassis mounted mowers, other cutters and replacement parts for heavy-duty and intensive uses and heavy duty, tractor- and truck-mounted mowing and vegetation maintenance equipment, and replacement parts. This segment also provides rotary and finishing mowers, flail and disc mowers, front-end loaders, backhoes, rotary tillers, posthole diggers, scraper blades and replacement parts, zero turn radius mowers, cutting parts, plain and hard-faced replacement tillage tools, disc blades, and fertilizer application components; aftermarket agricultural parts, heavy-duty mechanical rotary mowers, snow blowers, rock removal equipment, tractor attachments, agricultural implements, hydraulic and boom-mounted hedge and grass cutters, hedgerow cutters, industrial grass mowers, agricultural seedbed preparation cultivators, self-propelled sprayers and multi-drive load-carrying vehicles, and cutting blades. The company's Industrial Equipment Division segment offers truck-mounted air vacuum, mechanical broom, and regenerative air sweepers, pothole patchers, leaf collection equipment and replacement brooms, parking lot and street sweepers, excavators, catch basin cleaners, and roadway debris vacuum systems, as well as truck-mounted vacuum machines, combination sewer cleaners, and hydro excavators. This segment also offers ice control products, snowplows and heavy duty snow removal equipment, hitches, attachments, and graders; and public works and runway maintenance products, parts, and services, and high pressure cleaning systems and trenchers. The company was founded in 1955 and is headquartered in Seguin, Texas.

About AB SKF

AB SKF (publ) designs, manufactures, and sells bearings and units, seals, lubrication systems, condition monitoring, and services worldwide. It operates in two segments, Industrial and Automotive. The company offers rolling, mounted and housings, super-precision, slewing, plain, magnetic, and thin section bearings; industrial and automotive seals; lubricants, manual lubrication tools, lubricators, automatic lubrication systems, and lubrication system components; maintenance products, such as hydraulic, mechanical, and alignment tools, as well as heaters; belts, pulleys, chains, sprockets, bushings and hubs, couplings, and bolts and tightening systems; condition monitoring systems; test and measuring equipment, such as waviness and roundness analyzers, noise and vibration testers, and grease test rigs, as well as calibration with traceability, machine training and support, and upgrades and refurbishment services; and vehicle aftermarket products. It also provides application engineering services consisting of technical consultancy, numerical simulation and design, and root cause analysis; asset management services, such as assessment and benchmarking, maintenance strategy review, spare parts and inventory management, and lubrication management; condition-based maintenance, including vibration analysis and diagnostics, thermography, lubrication analysis, and condition monitoring system installation; mechanical maintenance comprising mounting and dismounting, precision alignment, and balancing; remanufacturing and customization; and training solutions, which include instructor-led training, e-learning courses, and webinar recordings. The company serves the aerospace, agriculture, automotive, construction, food and beverage, general machinery, machine tools, marine, material handling, metals, mining, mineral processing, ocean energy, pulp and paper, railways, and wind industries. AB SKF (publ) was incorporated in 1907 and is headquartered in Gothenburg, Sweden.