Head to Head Survey: Toromont Industries (OTCMKTS:TMTNF) and Karat Packaging (NASDAQ:KRT)

Karat Packaging (NASDAQ:KRT) and Toromont Industries (OTCMKTS:TMTNF) are both industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, dividends, institutional ownership, risk and profitability.

Analyst Recommendations

This is a breakdown of recent ratings for Karat Packaging and Toromont Industries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Karat Packaging	1	2	3	0	2.33
Toromont Industries	0	3	4	0	2.57

Karat Packaging presently has a consensus target price of $36.50, indicating a potential downside of 22.80%. Given Karat Packaging’s higher possible upside, research analysts clearly believe Karat Packaging is more favorable than Toromont Industries.

Dividends

Karat Packaging pays an annual dividend of $1.88 per share and has a dividend yield of 4.0%. Toromont Industries pays an annual dividend of $1.62 per share and has a dividend yield of 1.1%. Karat Packaging pays out 75.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Toromont Industries pays out 49.4% of its earnings in the form of a dividend. Karat Packaging has raised its dividend for 2 consecutive years. Karat Packaging is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

25.2% of Karat Packaging shares are owned by institutional investors. 57.9% of Karat Packaging shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Karat Packaging and Toromont Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Karat Packaging	10.18%	30.62%	16.67%
Toromont Industries	9.25%	15.53%	9.42%

Valuation & Earnings

This table compares Karat Packaging and Toromont Industries”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Karat Packaging	$467.74 million	2.01	$31.48 million	$2.50	18.91
Toromont Industries	$3.72 billion	3.21	$355.41 million	$3.28	44.66

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

About Karat Packaging

Karat Packaging Inc., together with its subsidiaries, engages in the manufacture and distribution of single-use disposable products in plastic, paper, biopolymer-based, and other compostable forms used in various restaurant and foodservice settings. It provides food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves, and other products under the Karat Earth brand. The company also provides new product development, design, printing, and logistics services. It offers its products to national and regional distributors, restaurant chains, retail establishments, and online customers. The company was founded in 2000 and is based in Chino, California.

About Toromont Industries

Toromont Industries Ltd. provides specialized capital equipment in Canada, the United States, and internationally. It operates in two segments, Equipment Group and CIMCO. The Equipment Group segment engages in the sale, rental, and service of mobile equipment for Caterpillar and other manufacturers; sale, rental, and service of engines used in various applications, including industrial, commercial, marine, on-highway trucks, and power generation; and sale of complementary and related products, parts, and services. This segment serves road building, mining, aggregates, infrastructure, residential and commercial construction, power generation, agriculture, forestry, and waste management markets. The CIMCO segment is involved in the design, engineering, fabrication, installation, and after-sale support of refrigeration systems in industrial and recreational markets. This segment primarily serves beverage and food processing, cold storage, food distribution, mining, and recreational ice rink sectors. Toromont Industries Ltd. was founded in 1961 and is headquartered in Concord, Canada.