Friedman Industries (NASDAQ:FRD) versus Wheaton Precious Metals (NYSE:WPM) Head-To-Head Analysis

Friedman Industries (NASDAQ:FRD) and Wheaton Precious Metals (NYSE:WPM) are both materials companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, profitability, dividends and institutional ownership.

Dividends

Friedman Industries pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. Wheaton Precious Metals pays an annual dividend of $0.78 per share and has a dividend yield of 0.7%. Friedman Industries pays out 5.8% of its earnings in the form of a dividend. Wheaton Precious Metals pays out 19.7% 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. Friedman Industries has increased its dividend for 1 consecutive years and Wheaton Precious Metals has increased its dividend for 2 consecutive years. Wheaton Precious Metals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Friedman Industries has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500. Comparatively, Wheaton Precious Metals has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.

Institutional and Insider Ownership

33.3% of Friedman Industries shares are held by institutional investors. Comparatively, 70.3% of Wheaton Precious Metals shares are held by institutional investors. 6.6% of Friedman Industries shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Friedman Industries and Wheaton Precious Metals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Friedman Industries	3.02%	13.70%	6.63%
Wheaton Precious Metals	65.55%	20.20%	19.28%

Analyst Recommendations

This is a breakdown of recent recommendations for Friedman Industries and Wheaton Precious Metals, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Friedman Industries	0	0	1	0	3.00
Wheaton Precious Metals	0	1	12	0	2.92

Wheaton Precious Metals has a consensus price target of $165.55, suggesting a potential upside of 43.15%. Given Wheaton Precious Metals’ higher possible upside, analysts clearly believe Wheaton Precious Metals is more favorable than Friedman Industries.

Earnings & Valuation

This table compares Friedman Industries and Wheaton Precious Metals”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Friedman Industries	$646.91 million	0.39	$19.53 million	$2.76	12.82
Wheaton Precious Metals	$2.31 billion	22.69	$1.47 billion	$3.96	29.20

Wheaton Precious Metals has higher revenue and earnings than Friedman Industries. Friedman Industries is trading at a lower price-to-earnings ratio than Wheaton Precious Metals, indicating that it is currently the more affordable of the two stocks.

Summary

Wheaton Precious Metals beats Friedman Industries on 13 of the 17 factors compared between the two stocks.

About Friedman Industries

Friedman Industries, Incorporated engages in steel processing, pipe manufacturing and processing, and the steel and pipe distribution businesses the United States. It operates in two segments, Coil and Tubular. The Coil segment is involved in the conversion of steel coils into flat sheet and plate steel cut to customer specifications and reselling steel coils. This segment also processes customer-owned coils on a fee basis. The company sells coil products and processing services to approximately 200 customers located primarily in the midwestern, southwestern and southeastern regions of the United States. Its principal customers for these products and services are steel distributors and customers manufacturing steel products, such as steel buildings, railroad cars, barges, tanks and containers, trailers, component parts and other fabricated steel products. The Tubular segment manufactures line and oil country pipes, as well as pipes for structural applications. This segment sells its tubular products principally to steel and pipe distributors through its own sales force. The company was incorporated in 1965 and is headquartered in Longview, Texas.

About Wheaton Precious Metals

Wheaton Precious Metals Corp. primarily sells precious metals in North America, Europe, and South America. It produces and sells gold, silver, palladium, and cobalt deposits. The company was formerly known as Silver Wheaton Corp. and changed its name to Wheaton Precious Metals Corp. in May 2017. Wheaton Precious Metals Corp. was founded in 2004 and is headquartered in Vancouver, Canada.