United States Steel Corporation (NYSE: X) and L.B. Foster (NASDAQ:FSTR) are both basic materials companies, but which is the better business? We will compare the two companies based on the strength of their valuation, earnings, dividends, analyst recommendations, risk, profitability and institutional ownership.

Volatility and Risk

United States Steel Corporation has a beta of 2.88, meaning that its share price is 188% more volatile than the S&P 500. Comparatively, L.B. Foster has a beta of 2.21, meaning that its share price is 121% more volatile than the S&P 500.

Institutional and Insider Ownership

63.4% of United States Steel Corporation shares are owned by institutional investors. Comparatively, 71.1% of L.B. Foster shares are owned by institutional investors. 1.0% of United States Steel Corporation shares are owned by insiders. Comparatively, 15.2% of L.B. Foster shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares United States Steel Corporation and L.B. Foster’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United States Steel Corporation 0.24% 6.50% 1.67%
L.B. Foster -9.83% -27.82% -10.07%

Dividends

United States Steel Corporation pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. L.B. Foster does not pay a dividend. United States Steel Corporation pays out 125.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings & Valuation

This table compares United States Steel Corporation and L.B. Foster’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
United States Steel Corporation $11.21 billion 0.37 $838.00 million $0.16 148.94
L.B. Foster $263.56 million 0.80 $15.71 million ($4.49) -4.53

United States Steel Corporation has higher revenue and earnings than L.B. Foster. L.B. Foster is trading at a lower price-to-earnings ratio than United States Steel Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for United States Steel Corporation and L.B. Foster, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United States Steel Corporation 4 5 8 0 2.24
L.B. Foster 0 0 0 0 N/A

United States Steel Corporation presently has a consensus price target of $27.66, suggesting a potential upside of 16.05%. Given United States Steel Corporation’s higher possible upside, analysts plainly believe United States Steel Corporation is more favorable than L.B. Foster.

Summary

United States Steel Corporation beats L.B. Foster on 10 of the 14 factors compared between the two stocks.

About United States Steel Corporation

United States Steel Corporation is an integrated steel producer. The Company is engaged in producing flat-rolled and tubular products with production operations in North America and Europe. The Company operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE) and Tubular Products (Tubular). The Flat-Rolled segment includes the operating results of its integrated steel plants and equity investees in the United States involved in the production of slabs, rounds, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States. The USSE segment includes the operating results of U. S. Steel Kosice (USSK) and its integrated steel plant and coke production facilities in Slovakia. The Tubular segment includes the operating results of its tubular production facilities, primarily in the United States and equity investees in the United States and Brazil.

About L.B. Foster

L.B. Foster Company is a manufacturer, fabricator and distributor of products and services for the rail, construction, energy and utility markets. The Company’s segments include Rail Products and Services, Construction Products, and Tubular and Energy Services. Its Rail Products segment provides a range of new and used rail, trackwork and accessories to railroads, mines and industry. The Rail segment designs and produces concrete railroad ties, insulated rail joints, power rail, track fasteners, coverboards and special accessories for mass transit and other rail systems. The Construction Products segment sells and rents steel sheet piling, H-bearing pile and other piling products for foundation and earth retention requirements. The Tubular and Energy Services segment supplies pipe coatings for natural gas pipelines and utilities, blending, injection and metering equipment for the oil and gas market, and produces threaded pipe products for industrial water well and irrigation markets.

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