FARO Technologies (NASDAQ: FARO) and NL Industries (NYSE:NL) are both small-cap industrials companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, dividends, institutional ownership, valuation, profitability and analyst recommendations.

Earnings and Valuation

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This table compares FARO Technologies and NL Industries’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FARO Technologies $360.92 million 2.79 -$14.51 million ($2.02) -29.68
NL Industries $112.00 million 3.50 $15.32 million $2.38 3.38

NL Industries has lower revenue, but higher earnings than FARO Technologies. FARO Technologies is trading at a lower price-to-earnings ratio than NL Industries, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

FARO Technologies has a beta of 1.44, meaning that its stock price is 44% more volatile than the S&P 500. Comparatively, NL Industries has a beta of 2.92, meaning that its stock price is 192% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for FARO Technologies and NL Industries, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FARO Technologies 0 2 4 0 2.67
NL Industries 1 0 0 0 1.00

FARO Technologies currently has a consensus price target of $56.60, indicating a potential downside of 5.59%. NL Industries has a consensus price target of $14.00, indicating a potential upside of 73.91%. Given NL Industries’ higher probable upside, analysts plainly believe NL Industries is more favorable than FARO Technologies.

Profitability

This table compares FARO Technologies and NL Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FARO Technologies -4.02% 1.39% 1.11%
NL Industries 103.57% 32.97% 17.67%

Institutional & Insider Ownership

93.8% of FARO Technologies shares are owned by institutional investors. Comparatively, 10.5% of NL Industries shares are owned by institutional investors. 2.4% of FARO Technologies shares are owned by insiders. Comparatively, 0.1% of NL Industries shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

NL Industries beats FARO Technologies on 9 of the 14 factors compared between the two stocks.

About FARO Technologies

FARO Technologies, Inc. designs, develops, manufactures, markets and supports software driven, three-dimensional (3D) measurement, imaging and realization systems. The Company operates in three segments: Factory Metrology, Construction BIM-CIM and Other. It sells its products through a direct sales force across customers in a range of manufacturing, industrial, architecture, surveying, building construction and law enforcement applications. Its FaroArm, FARO Laser ScanArm, FARO Gage, FARO Laser Tracker, FARO Cobalt Array 3D Imager AMP, and their companion CAM2 software provide for Computer-Aided Design-based inspection and/or factory-level statistical process control and surveying. It operates in international markets throughout the world and maintain sales offices in Australia, Brazil, Canada, China, India, Italy, Japan, Malaysia, Mexico, the Netherlands, Poland, Portugal, Singapore, South Korea, Spain, Switzerland, Thailand, Turkey, the United Kingdom, the United States and Vietnam.

About NL Industries

NL Industries, Inc. is a holding company. The Company operates in the component products industry through its subsidiary, CompX International Inc. (CompX). The Company operates in the chemicals industry through its non-controlling interest in Kronos Worldwide, Inc. (Kronos). The Company, through Compx, manufactures engineered components that are sold to a range of industries, including recreational transportation (including boats), postal, office and institutional furniture, cabinetry, tool storage, healthcare, gas stations and vending equipment. Kronos is a global producer and marketer of value-added titanium dioxide pigments (TiO2), a base industrial product used in imparting whiteness, brightness and opacity to a range of customer applications and end use markets, including coatings, plastics, paper, inks, food, cosmetics, and other industrial and consumer products. Kronos has production facilities in Europe and North America.

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