Critical Contrast: Applied Industrial Technologies (AIT) and NOW (DNOW)
Applied Industrial Technologies (NYSE: AIT) and NOW (NYSE:DNOW) are both industrial products companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, profitabiliy, dividends and risk.
Insider & Institutional Ownership
87.4% of Applied Industrial Technologies shares are held by institutional investors. Comparatively, 98.7% of NOW shares are held by institutional investors. 4.4% of Applied Industrial Technologies shares are held by insiders. Comparatively, 3.3% of NOW shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This is a breakdown of recent recommendations for Applied Industrial Technologies and NOW, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Applied Industrial Technologies||0||2||0||0||2.00|
Applied Industrial Technologies currently has a consensus price target of $63.00, suggesting a potential upside of 12.50%. NOW has a consensus price target of $19.33, suggesting a potential upside of 43.32%. Given NOW’s stronger consensus rating and higher probable upside, analysts clearly believe NOW is more favorable than Applied Industrial Technologies.
Applied Industrial Technologies pays an annual dividend of $1.16 per share and has a dividend yield of 2.1%. NOW does not pay a dividend. Applied Industrial Technologies pays out 42.6% of its earnings in the form of a dividend. Applied Industrial Technologies has increased its dividend for 7 consecutive years.
Risk and Volatility
Applied Industrial Technologies has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, NOW has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.
Earnings & Valuation
This table compares Applied Industrial Technologies and NOW’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Applied Industrial Technologies||$2.55 billion||0.86||$208.18 million||$2.72||20.59|
|NOW||$2.34 billion||0.62||-$81.00 million||($1.56)||-8.65|
Applied Industrial Technologies has higher revenue and earnings than NOW. NOW 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 table compares Applied Industrial Technologies and NOW’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Applied Industrial Technologies||4.20%||15.70%||8.15%|
Applied Industrial Technologies beats NOW on 11 of the 16 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.
NOW Inc. (NOW) is a global distributor to the oil and gas and industrial markets. The Company operates under the DistributionNOW and Wilson Export brands. Its segments include the United States, Canada and International. As of December 31, 2016, its segments, the United States, Canada and International, had over 200, 55 and 35 locations, respectively. The United States segment comprises United States Energy, United States Supply Chain and United States Process Solutions. NOW’s energy product offerings are used in the oil and gas industry, including upstream drilling and completion, exploration and production, midstream infrastructure development and downstream petroleum refining, as well as in other industries, such as chemical processing, power generation and industrial manufacturing operations. It provides supply chain management to drilling contractors, exploration and production (E&P) operators, midstream operators, downstream energy and industrial manufacturing companies.
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