Critical Review: Deluxe (NYSE:DLX) and Brady (NYSE:BRC)

Deluxe (NYSE:DLX) and Brady (NYSE:BRC) are both industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, institutional ownership, profitability and risk.

Valuation and Earnings

This table compares Deluxe and Brady”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Deluxe	$2.13 billion	0.51	$82.10 million	$2.25	10.57
Brady	$1.62 billion	2.63	$189.26 million	$4.39	20.60

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

Dividends

Deluxe pays an annual dividend of $1.20 per share and has a dividend yield of 5.0%. Brady pays an annual dividend of $0.98 per share and has a dividend yield of 1.1%. Deluxe pays out 53.3% of its earnings in the form of a dividend. Brady pays out 22.3% 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. Brady has increased its dividend for 39 consecutive years.

Profitability

This table compares Deluxe and Brady’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Deluxe	4.91%	23.51%	6.12%
Brady	12.93%	19.01%	13.47%

Institutional & Insider Ownership

93.9% of Deluxe shares are owned by institutional investors. Comparatively, 76.3% of Brady shares are owned by institutional investors. 5.4% of Deluxe shares are owned by company insiders. Comparatively, 15.6% of Brady shares are owned 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.

Analyst Ratings

This is a summary of current ratings for Deluxe and Brady, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Deluxe	0	3	0	0	2.00
Brady	0	0	2	0	3.00

Brady has a consensus price target of $103.00, indicating a potential upside of 13.92%. Given Brady’s stronger consensus rating and higher probable upside, analysts plainly believe Brady is more favorable than Deluxe.

Risk & Volatility

Deluxe has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, Brady has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500.

Summary

Brady beats Deluxe on 12 of the 17 factors compared between the two stocks.

About Deluxe

Deluxe Corporation provides technology-enabled solutions to enterprises, small businesses, and financial institutions in the United States, Canada, and Australia. It operates through Merchant Services, B2B Payments, Data Solutions, and Print segments. The Merchant Services offers credit and debit card authorization and payment systems, as well as processing services primarily to small and medium-sized retail and service businesses. The B2B Payments segment provides treasury management solutions, including remittance and lockbox processing, remote deposit capture, automated receivables management, payment processing, and cash application, as well as automated payables management, such as medical payment and deluxe payment exchange. The Data solutions segment offers data-driven marketing solutions, financial institution profitability reporting, and business incorporation services. The Print segment provides printed personal and business checks, printed business forms, business accessories, and promotional products. It sells through multi-channel sales and marketing, and scalable partnerships. The company was formerly known as Deluxe Check Printers, Incorporated and changed its name to Deluxe Corporation in 1988. Deluxe Corporation was founded in 1915 and is headquartered in Minneapolis, Minnesota.

About Brady

Brady Corporation manufactures and supplies identification solutions (IDS) and workplace safety (WPS) products to identify and protect premises, products, and people in the United States and internationally. The company offers materials, printing systems, RFID, and bar code scanners for product identification, brand protection labeling, work in process labeling, finished product identification, and industrial track and trace applications; safety signs, floor-marking tapes, pipe markers, labeling systems, spill control products, lockout/tagout device, and software and services for safety compliance auditing, procedure writing, and training; and hand-held printers, wire markers, sleeves, and tags for wire identification. It also provides name tags, badges, lanyards, rigid card printing systems, and access control software for people identification; and wristbands, labels, printing systems, and other products for tracking and improving the safety of patients. In addition, the company offers workplace safety, identification, and compliance products, such as safety and compliance signs, tags, labels, and markings; informational signage and markings; asset tracking labels; facility safety and personal protection equipment; first-aid products; and other compliance products for process, government, education, construction, and utilities industries. Further, it provides stock and custom identification products; and sells related resale products. The company serves industrial and electronic manufacturing, healthcare, chemical, oil, gas, automotive, aerospace, governments, mass transit, electrical contractors, education, leisure and entertainment, telecommunications, and other industries through distributors, direct sales force, and digital channels. Brady Corporation was incorporated in 1914 and is headquartered in Milwaukee, Wisconsin.