Head-To-Head Contrast: Kennametal (NYSE:KMT) vs. Hitachi Constr (OTCMKTS:HTCMY)

Kennametal (NYSE:KMT) and Hitachi Constr (OTCMKTS:HTCMY) are both mid-cap industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings for Kennametal and Hitachi Constr, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kennametal	4	5	0	0	1.56
Hitachi Constr	0	0	0	0	0.00

Kennametal presently has a consensus price target of $35.79, indicating a potential upside of 8.09%. Given Kennametal’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Kennametal is more favorable than Hitachi Constr.

Volatility and Risk

Kennametal has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500. Comparatively, Hitachi Constr has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.

Earnings and Valuation

This table compares Kennametal and Hitachi Constr”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kennametal	$2.36 billion	1.07	$342.39 million	$4.40	7.52
Hitachi Constr	$9.34 billion	0.76	$483.07 million	$5.49	11.99

Hitachi Constr has higher revenue and earnings than Kennametal. Kennametal is trading at a lower price-to-earnings ratio than Hitachi Constr, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Kennametal and Hitachi Constr’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kennametal	14.53%	24.83%	12.84%
Hitachi Constr	6.31%	9.57%	4.81%

Dividends

Kennametal pays an annual dividend of $0.80 per share and has a dividend yield of 2.4%. Hitachi Constr pays an annual dividend of $1.86 per share and has a dividend yield of 2.8%. Kennametal pays out 18.2% of its earnings in the form of a dividend. Hitachi Constr pays out 33.9% 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.

Summary

Kennametal beats Hitachi Constr on 8 of the 13 factors compared between the two stocks.

About Kennametal

Kennametal Inc. engages in development and application of tungsten carbides, ceramics, and super-hard materials and solutions for use in metal cutting and extreme wear applications to enable customers work against corrosion and high temperatures conditions worldwide. The company operates through two segments, Metal Cutting and Infrastructure. It offers standard and custom products, including turning, milling, hole making, tooling systems, and services, as well as specialized wear components and metallurgical powders for manufacturers engaged in various industries, such as the manufacturers of transportation vehicles and components, machine tools, and light and heavy machinery; airframe and aerospace components; and energy-related components for the oil and gas industry, as well as power generation. In addition, the company provides specified product design, selection, application, and support services; and standard and custom metal cutting solutions to aerospace, general engineering, energy, and transportation customers. Further, it produces compacts, nozzles, frac seats, and custom components used in oil and gas, and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling, and road milling; tungsten carbide powders for the oil and gas, aerospace, and process industries; and ceramics used by the packaging industry for metallization of films and papers. The company provides its products under the Kennametal, WIDIA, WIDIA Hanita, and WIDIA GTD brands through its direct sales force; a network of independent and national distributors; integrated supplier channels; and through the Internet. The company was founded in 1938 and is based in Pittsburgh, Pennsylvania.

About Hitachi Constr

Hitachi Construction Machinery Co., Ltd., together with its subsidiaries, manufactures and sells construction machineries worldwide. The company operates through two segments, Construction Machinery Business and Solution Business. It offers excavators and wheel loaders, hydraulic excavators, compaction equipment, and rigid dump trucks. The company also provides ICT construction solutions; ConSite that monitors machines' operational status and alarms by sending monthly operational reports, as well as notifies emergency alarms; Fleet management system, which offers real-time monitoring of dump truck for optimizing vehicle operations; and autonomous haulage system for autonomous operation of mining dump trucks. In addition, it provides parts and services; used equipment under the PREMIUM USED brand; machinery rental services under the PREMIUM RENTAL and REC brand names; and parts remanufacturing services. The company was incorporated in 1951 and is headquartered in Taito, Japan. Hitachi Construction Machinery Co., Ltd. is a subsidiary of Hitachi, Ltd.