Head to Head Comparison: Nucor (NUE) & Tenaris (TS)

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Nucor (NYSE:NUE) and Tenaris (NYSE:TS) are both large-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Institutional & Insider Ownership

76.4% of Nucor shares are held by institutional investors. Comparatively, 13.2% of Tenaris shares are held by institutional investors. 0.8% of Nucor shares are held by insiders. Comparatively, 0.2% of Tenaris shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Nucor and Tenaris’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nucor 8.79% 20.72% 11.78%
Tenaris 11.35% 6.94% 5.57%

Risk and Volatility

Nucor has a beta of 1.46, indicating that its share price is 46% more volatile than the S&P 500. Comparatively, Tenaris has a beta of 0.77, indicating that its share price is 23% less volatile than the S&P 500.

Earnings & Valuation

This table compares Nucor and Tenaris’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nucor $20.25 billion 0.89 $1.32 billion $3.51 16.32
Tenaris $5.29 billion 2.65 $544.73 million $0.77 30.81

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

Dividends

Nucor pays an annual dividend of $1.60 per share and has a dividend yield of 2.8%. Tenaris pays an annual dividend of $0.52 per share and has a dividend yield of 2.2%. Nucor pays out 45.6% of its earnings in the form of a dividend. Tenaris pays out 67.5% 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. Nucor has increased its dividend for 45 consecutive years. Nucor is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Nucor and Tenaris, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nucor 0 3 10 0 2.77
Tenaris 0 6 11 0 2.65

Nucor presently has a consensus price target of $71.55, suggesting a potential upside of 24.90%. Tenaris has a consensus price target of $40.29, suggesting a potential upside of 69.86%. Given Tenaris’ higher possible upside, analysts clearly believe Tenaris is more favorable than Nucor.

Summary

Nucor beats Tenaris on 12 of the 17 factors compared between the two stocks.

About Nucor

Nucor Corporation manufactures and sells steel and steel products in the United States and internationally. It operates in three segments: Steel Mills, Steel Products, and Raw Materials. The Steel Mills segment produces hot-rolled, cold-rolled, and galvanized sheet steel products; hollow structural section steel tubing, steel electrical conduit, plate steel, and structural steel products; bar steel products, such as blooms, billets, concrete reinforcing and merchant bars, wire rods, and special bar quality; and tubular and plate steel products. This segment sells its products to steel service centers, fabricators, and manufacturers in automotive, energy, agricultural, heavy equipment, and transportation sectors. The Steel Products segment produces steel joists and joist girders, steel decks, fabricated concrete reinforcing and cold finished steel products, steel fasteners, metal building systems, steel gratings and expanded metal, and wire and wire mesh products to general contractors, fabricators, distributors, and manufacturers. Its products are used by contractors in constructing highways, bridges, reservoirs, utilities, hospitals, schools, airports, stadiums, and high-rise buildings. The Raw Materials segment produces direct reduced iron; processes ferrous and nonferrous metals; brokers ferrous and nonferrous metals, pig iron, hot briquetted iron; supplies ferro-alloys; and processes ferrous and nonferrous scrap metal, as well as engages in the natural gas drilling operations. This segment sells its ferrous scrap to electric arc furnace steel mills and foundries for use in manufacturing process; and nonferrous scrap metal to aluminum can producers, secondary aluminum smelters, steel mills and other processors, and consumers of various nonferrous metals. The company offers its products through its in-house sales forces; and internal distribution and trading companies. The company was founded in 1940 and is based in Charlotte, North Carolina.

About Tenaris

Tenaris S.A. produces and sells seamless and welded steel tubular products and related services for the oil and gas industry, and other industrial applications. The company offers products for oil and gas drilling operations, such as casing and tubing products, premium connections, drill pipes, coiled tubing, hot-rolled and cold-drawn seamless tubes, tubular and non-tubular accessories, and devices. It also provides offshore line pipe products, including top tensioned and steel catenary risers, export lines and flowlines, bends, corrosion resistant alloys, coiled line pipes, umbilical tubings, and coated pipes; and seamless and welded tubes for onshore line pipe; various seamless steel tubes and pipes for refineries, petrochemical, and gas-processing plants; and tubular products for the power generation industry. In addition, the company offers sucker rods, couplings, and accessories, as well as technical support services; coiled tubing; hot-rolled and cold-drawn seamless steel tubes and components for use in standard mechanical engineering application, and civil and industrial installations, as well as for manufacturing earth-moving machines, architectural structures, non-oil drilling systems, and gas cylinders; and seamless tubes and tube-based components for car manufacturers and their suppliers. Additionally, it offers financial services. The company operates in North America, South America, Europe, the Middle East, Africa, and the Asia Pacific. Tenaris S.A. was founded in 2001 and is headquartered in Luxembourg City, Luxembourg. Tenaris S.A. is a subsidiary of Techint Holdings S.à r.l.

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