Applied Industrial Technologies (NYSE: AIT) and Graham (NYSE:GHM) are both industrial products companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.
Applied Industrial Technologies pays an annual dividend of $1.20 per share and has a dividend yield of 1.7%. Graham pays an annual dividend of $0.36 per share and has a dividend yield of 1.7%. Applied Industrial Technologies pays out 32.1% of its earnings in the form of a dividend. Graham pays out -39.6% 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. Graham has increased its dividend for 8 consecutive years.
This table compares Applied Industrial Technologies and Graham’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Applied Industrial Technologies||5.43%||16.53%||8.99%|
Institutional and Insider Ownership
89.8% of Applied Industrial Technologies shares are held by institutional investors. Comparatively, 77.3% of Graham shares are held by institutional investors. 3.7% of Applied Industrial Technologies shares are held by insiders. Comparatively, 3.3% of Graham shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Volatility & Risk
Applied Industrial Technologies has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500. Comparatively, Graham has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500.
Earnings & Valuation
This table compares Applied Industrial Technologies and Graham’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Applied Industrial Technologies||$2.59 billion||1.05||$133.91 million||$3.74||18.74|
|Graham||$91.77 million||2.24||$5.02 million||($0.91)||-23.16|
Applied Industrial Technologies has higher revenue and earnings than Graham. Graham is trading at a lower price-to-earnings ratio than Applied Industrial Technologies, indicating that it is currently the more affordable of the two stocks.
This is a summary of current recommendations for Applied Industrial Technologies and Graham, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Applied Industrial Technologies||0||3||0||0||2.00|
Applied Industrial Technologies currently has a consensus target price of $63.00, suggesting a potential downside of 10.13%. Given Applied Industrial Technologies’ higher possible upside, research analysts clearly believe Applied Industrial Technologies is more favorable than Graham.
Applied Industrial Technologies beats Graham on 11 of the 15 factors compared between the two stocks.
About Applied Industrial Technologies
Applied Industrial Technologies, Inc. is an industrial distributor in North America, Australia and New Zealand, serving maintenance, repair and operations (MRO), and original equipment manufacturing customers in various industries. In addition, the Company provides engineering, design, and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber, and fluid power shop services. It operates in two segments: service center-based distribution and fluid power businesses. The service center-based distribution segment provides customers with a range of industrial products primarily through a network of service centers. The fluid power businesses segment consists of specialized regional companies that distribute fluid power components, design and assemble fluid power systems, and perform equipment repair. The fluid power businesses primarily sell products and services directly to customers rather than through the service centers.
Graham Corporation designs, manufactures and sells critical equipment for the energy, defense and chemical/petrochemical industries. The Company designs and manufactures custom-engineered ejectors, vacuum pumping systems, surface condensers and vacuum systems. It is a nuclear code accredited fabrication and specialty machining company. It supplies components used inside reactor vessels and outside containment vessels of nuclear power facilities. Its equipment is found in applications, such as metal refining, pulp and paper processing, water heating, refrigeration, desalination, food processing, pharmaceutical, heating, ventilating and air conditioning. For the defense industry, its equipment is used in nuclear propulsion power systems for the United States Navy. The Company’s products are used in a range of industrial process applications in energy markets, including petroleum refining, defense, chemical and petrochemical processing, power generation/alternative energy and other.
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