The Timken (NYSE: TKR) and SKF (OTCMKTS:SKFRY) 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 earnings, profitability, analyst recommendations, valuation, institutional ownership, dividends and risk.
Risk and Volatility
The Timken has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500. Comparatively, SKF has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500.
This table compares The Timken and SKF’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of recent ratings and recommmendations for The Timken and SKF, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
The Timken currently has a consensus price target of $51.00, indicating a potential upside of 13.84%. Given The Timken’s stronger consensus rating and higher probable upside, research analysts clearly believe The Timken is more favorable than SKF.
Valuation and Earnings
This table compares The Timken and SKF’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|The Timken||$3.00 billion||1.16||$203.40 million||$2.63||17.03|
|SKF||$9.14 billion||1.01||$641.75 million||$1.41||14.32|
SKF has higher revenue and earnings than The Timken. SKF is trading at a lower price-to-earnings ratio than The Timken, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
79.5% of The Timken shares are held by institutional investors. Comparatively, 0.5% of SKF shares are held by institutional investors. 11.2% of The Timken shares are held by company 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.
The Timken pays an annual dividend of $1.08 per share and has a dividend yield of 2.4%. SKF pays an annual dividend of $0.59 per share and has a dividend yield of 2.9%. The Timken pays out 41.1% of its earnings in the form of a dividend. SKF pays out 41.8% 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. The Timken has raised its dividend for 4 consecutive years.
The Timken beats SKF on 11 of the 17 factors compared between the two stocks.
The Timken Company Profile
The Timken Company engineers, manufactures, and markets bearings, transmissions, gearboxes, belts, chains, lubrication systems, couplings, industrial clutches and brakes, and related products worldwide. It operates through two segments, Mobile Industries and Process Industries. The Mobile Industries segment offers a portfolio of bearings, seals, lubrication devices, and systems, as well as power transmission components, engineered chains, augers, belts, couplings, clutches and brakes, and related products and maintenance services to original equipment manufacturers (OEMs) and end users of off-highway equipment for the agricultural, construction, mining, outdoor power equipment, and power sports markets; and on-highway vehicles, including passenger cars, light trucks, and medium- and heavy-duty trucks, as well as rail cars and locomotives. It also provides power transmission systems and flight-critical components for civil and military aircraft, which comprise bearings, helicopter transmission systems, rotor-head assemblies, turbine engine components, gears, and housings. This segment sells it parts through a network of authorized automotive and heavy-truck distributors to individual end users, equipment owners, operators, and maintenance shops. The Process Industries segment supplies industrial bearings and assemblies; power transmission components, including gears and gearboxes; and couplings, seals, lubricants, chains, belts, and related products and services to OEMs and end-users in various industries. It also supports aftermarket sales and service needs through its network of authorized industrial distributors; and offers repair and service for bearings and gearboxes, as well as electric motor rewind, repair, and services to end users. The Timken Company was founded in 1899 and is headquartered in North Canton, Ohio.
SKF Company Profile
AB SKF (publ) offers bearings, seals, mechatronics, condition monitoring, lubrication systems, and services. It operates in two segments, Industrial and Automotive. The company's products include bearings, units, and housings; seals; lubrication solutions; linear motion systems; actuation systems, screws, and linear guides and tables; magnetic bearings/permanent magnetic electric motors; mechatronic solutions; maintenance products; condition monitoring systems; power transmission products and solutions; coupling systems; test and measurement equipment; and vehicle aftermarket products, such as wheel end, powertrain, driveline, and steering and suspension products, as well as tools and lubricants. Its services comprise asset management, customer training, engineering consultancy, logistics, mechanical maintenance, and remanufacturing and maintenance services. The company offers its solutions for various industries, including aerospace, agriculture, automation, cars and light trucks, compressors, construction, electric motors, food and beverage, home appliances, industrial fans and pumps, industrial transmissions, machine tools, marine, material handling, medical and health care, metals, mining, mineral processing, ocean energy, oil and gas, portable power tools, power generation, pulp and paper, racing, railways, skates, trucks, trailers and buses, two and three wheelers, and wind energy. AB SKF (publ) markets its products directly, as well as through a network of distributors in North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company was founded in 1907 and is headquartered in Gothenburg, Sweden.
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