Northwest Pipe (NASDAQ: NWPX) and Synalloy Corporation (NASDAQ:SYNL) are both small-cap steel – nec companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Institutional and Insider Ownership

84.1% of Northwest Pipe shares are held by institutional investors. Comparatively, 47.4% of Synalloy Corporation shares are held by institutional investors. 2.0% of Northwest Pipe shares are held by company insiders. Comparatively, 10.6% of Synalloy Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Northwest Pipe and Synalloy Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Northwest Pipe -1.59% -3.03% -2.67%
Synalloy Corporation -0.59% 1.85% 1.03%

Dividends

Synalloy Corporation pays an annual dividend of $0.13 per share and has a dividend yield of 1.0%. Northwest Pipe does not pay a dividend. Synalloy Corporation pays out -100.0% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current ratings and target prices for Northwest Pipe and Synalloy Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northwest Pipe 0 1 0 0 2.00
Synalloy Corporation 0 0 0 0 N/A

Northwest Pipe currently has a consensus target price of $9.00, suggesting a potential downside of 47.61%. Given Northwest Pipe’s higher probable upside, equities analysts clearly believe Northwest Pipe is more favorable than Synalloy Corporation.

Volatility and Risk

Northwest Pipe has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500. Comparatively, Synalloy Corporation has a beta of 0.18, meaning that its stock price is 82% less volatile than the S&P 500.

Earnings and Valuation

This table compares Northwest Pipe and Synalloy Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Northwest Pipe $156.26 million 1.06 -$9.26 million ($0.18) -95.44
Synalloy Corporation $138.57 million 0.82 -$7.09 million ($0.13) -100.00

Synalloy Corporation has higher revenue, but lower earnings than Northwest Pipe. Synalloy Corporation is trading at a lower price-to-earnings ratio than Northwest Pipe, indicating that it is currently the more affordable of the two stocks.

Summary

Synalloy Corporation beats Northwest Pipe on 8 of the 13 factors compared between the two stocks.

About Northwest Pipe

Northwest Pipe Company is a manufacturer of engineered steel pipe water systems. The Company operates through two segments. The Water Transmission segment produces steel pipeline systems for use in drinking water infrastructure, and has approximately eight manufacturing facilities, located in Portland, Oregon; Denver, Colorado; Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas; St. Louis, Missouri; Salt Lake City, Utah, and Monterrey, Mexico. The Tubular Products segment produces steel line pipe products for energy applications, and has a manufacturing facility located in Atchison, Kansas. The Company, through Water Transmission Group, produces engineered welded steel pipe products for use in water transmission applications. It also manufactures smaller diameter electric resistance welded (ERW) steel pipe through its Tubular Products Group. The Company’s solutions-based products are used in water transmission, plant piping, tunnels and river crossings applications.

About Synalloy Corporation

Synalloy Corporation is a chemical manufacturing company. The Company operates through two segments: the Metals Segment and the Specialty Chemicals Segment. The Company’s Metals Segment comprises three subsidiaries: Synalloy Metals, Inc., which owns Bristol Metals, LLC (BRISMET), located in Bristol, Tennessee; Palmer of Texas Tanks, Inc. (Palmer), located in Andrews, Texas; and Specialty Pipe & Tube, Inc. (Specialty), located in Mineral Ridge, Ohio and Houston, Texas. The Company’s Metals Segment manufactures stainless steel, other alloy pipe, storage solutions and separation equipment. The Company’s Specialty Chemicals segment consists of the Company’s subsidiary, Manufacturers Soap and Chemical Company (MS&C). The Specialty Chemicals Segment manufactures lubricants, surfactants, reaction intermediaries, sulfated fats and oils, and chemical tolling manufacturing resources.

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