Contrasting Briggs & Stratton (BGG) and Graham (GHM)

Briggs & Stratton (NYSE: BGG) and Graham (NYSE:GHM) are both small-cap industrial products companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, risk, earnings and institutional ownership.

Valuation & Earnings

This table compares Briggs & Stratton and Graham’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Briggs & Stratton $1.79 billion 0.50 $56.65 million $0.54 38.80
Graham $91.77 million 2.27 $5.02 million ($0.91) -23.45

Briggs & Stratton has higher revenue and earnings than Graham. Graham is trading at a lower price-to-earnings ratio than Briggs & Stratton, indicating that it is currently the more affordable of the two stocks.

Dividends

Briggs & Stratton pays an annual dividend of $0.56 per share and has a dividend yield of 2.7%. Graham pays an annual dividend of $0.36 per share and has a dividend yield of 1.7%. Briggs & Stratton pays out 103.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Graham pays out -39.6% of its earnings in the form of a dividend. Briggs & Stratton has increased its dividend for 6 consecutive years. Briggs & Stratton is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Briggs & Stratton has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500. Comparatively, Graham has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Briggs & Stratton and Graham, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Briggs & Stratton 0 3 0 0 2.00
Graham 0 0 0 0 N/A

Briggs & Stratton currently has a consensus price target of $26.00, indicating a potential upside of 24.11%. Given Briggs & Stratton’s higher possible upside, equities analysts plainly believe Briggs & Stratton is more favorable than Graham.

Insider and Institutional Ownership

84.7% of Briggs & Stratton shares are held by institutional investors. Comparatively, 77.3% of Graham shares are held by institutional investors. 4.2% of Briggs & Stratton shares are held by insiders. Comparatively, 3.3% of Graham shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Briggs & Stratton and Graham’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Briggs & Stratton 1.31% 10.25% 3.61%
Graham -10.96% 2.67% 2.03%

Summary

Briggs & Stratton beats Graham on 11 of the 15 factors compared between the two stocks.

Briggs & Stratton Company Profile

Briggs & Stratton Corporation designs, manufactures, markets, sells, and services gasoline engines for outdoor power equipment to the original equipment manufacturers in the United States. It operates in two segments, Engines and Products. The Engines segment offers four-cycle aluminum alloy gasoline engines that are used primarily by the lawn and garden equipment industry. Its products are used in various lawn and garden equipment applications, including walk-behind lawn mowers, riding lawn mowers, garden tillers, and snow throwers, as well as products for industrial, construction, agricultural, and other consumer applications that include portable and standby generators, pumps, and pressure washers. This segment also manufactures and sells replacement engines and service parts to sales and service distributors. The Products segment primarily provides a line of portable and standby generators, pressure washers, snow throwers, lawn and garden power equipment, turf care, and job site products. This segment sells its products through various channels of retail distribution, including consumer home centers, warehouse clubs, mass merchants, and independent dealers and distributors under its own brands, such as Briggs & Stratton, Simplicity, Snapper, Snapper Pro, Ferris, Allmand, Billy Goat, Murray, Branco, and Victa, as well as other brands comprising Craftsman and Troy-Bilt. The company also exports its products to customers in Europe, Asia, Australia, and Canada. Briggs & Stratton Corporation was founded in 1908 and is headquartered in Wauwatosa, Wisconsin.

Graham Company Profile

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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