Financial Survey: Smith (A.O.) Corporation (AOS) & Spectrum Brands Holdings (SPB)

Smith (A.O.) Corporation (NYSE: AOS) and Spectrum Brands Holdings (NYSE:SPB) are both mid-cap industrial products companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, dividends, risk, institutional ownership, analyst recommendations, earnings and profitability.

Earnings & Valuation

This table compares Smith (A.O.) Corporation and Spectrum Brands Holdings’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Smith (A.O.) Corporation $2.86 billion 3.71 $549.50 million $1.97 31.19
Spectrum Brands Holdings $4.94 billion 1.23 $865.80 million $4.90 21.45

Spectrum Brands Holdings has higher revenue and earnings than Smith (A.O.) Corporation. Spectrum Brands Holdings is trading at a lower price-to-earnings ratio than Smith (A.O.) Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Smith (A.O.) Corporation pays an annual dividend of $0.56 per share and has a dividend yield of 0.9%. Spectrum Brands Holdings pays an annual dividend of $1.68 per share and has a dividend yield of 1.6%. Smith (A.O.) Corporation pays out 28.4% of its earnings in the form of a dividend. Spectrum Brands Holdings pays out 34.3% 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. Smith (A.O.) Corporation has raised its dividend for 11 consecutive years and Spectrum Brands Holdings has raised its dividend for 3 consecutive years.

Volatility & Risk

Smith (A.O.) Corporation has a beta of 1.5, meaning that its share price is 50% more volatile than the S&P 500. Comparatively, Spectrum Brands Holdings has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Profitability

This table compares Smith (A.O.) Corporation and Spectrum Brands Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Smith (A.O.) Corporation 12.10% 22.25% 11.89%
Spectrum Brands Holdings 5.87% 17.46% 4.45%

Institutional and Insider Ownership

74.0% of Smith (A.O.) Corporation shares are held by institutional investors. Comparatively, 47.1% of Spectrum Brands Holdings shares are held by institutional investors. 1.3% of Smith (A.O.) Corporation shares are held by insiders. Comparatively, 1.0% of Spectrum Brands Holdings shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Smith (A.O.) Corporation and Spectrum Brands Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Smith (A.O.) Corporation 0 2 5 0 2.71
Spectrum Brands Holdings 0 1 7 0 2.88

Smith (A.O.) Corporation presently has a consensus price target of $61.60, indicating a potential upside of 0.24%. Spectrum Brands Holdings has a consensus price target of $144.33, indicating a potential upside of 37.32%. Given Spectrum Brands Holdings’ stronger consensus rating and higher probable upside, analysts clearly believe Spectrum Brands Holdings is more favorable than Smith (A.O.) Corporation.

Summary

Smith (A.O.) Corporation beats Spectrum Brands Holdings on 10 of the 17 factors compared between the two stocks.

About Smith (A.O.) Corporation

A. O. Smith Corporation operates through two segments: North America and Rest of World. The Company’s Rest of World segment primarily consists of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas, gas tankless and electric water heaters, as well as water treatment products. Both segments primarily manufacture and market in their respective regions of the world. Its North America segment manufactures and globally markets specialty commercial water heating equipment, condensing and non-condensing boilers and water systems tanks. It also manufactures and markets in-home air purification products in China. It serves residential and commercial end markets in North America with a range of products, which include water heaters, boilers and other. It supplies water heaters to the residential market in China with a broad product offering, including electric, gas, gas tankless, heat pump and solar units, as well as combi boilers.

About Spectrum Brands Holdings

Spectrum Brands Holdings, Inc. (SB Holdings) is a diversified global consumer products company. The Company manufactures, markets and/or distributes its products in approximately 160 countries in the North America (NA); Europe, the Middle East and Africa (EMEA); Latin America (LATAM), and Asia-Pacific (APAC) regions. It has five segments: Global Batteries & Appliances (GBA), Global Pet Supplies (PET), Home and Garden (H&G), Hardware & Home Improvement (HHI) and Global Auto Care (GAC). The Company’s GBA segment includes product categories, such as consumer batteries, small appliances and personal care. The Company’s HHI segment includes product categories, such as lockset, plumbing and hardware. The Company’s PET segment’s product categories include aquatics, companion animal and pet food. The Company’s H&G segment’s product categories include controls, household and repellents. The Company’s GAC segment’s product categories include appearance, performance and A/C recharge.

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