Critical Contrast: AB SKF (OTCMKTS:SKFRY) & Fortive (NYSE:FTV)

AB SKF (OTCMKTS:SKFRY) and Fortive (NYSE:FTV) are both large-cap industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.

Dividends

AB SKF pays an annual dividend of $0.60 per share and has a dividend yield of 2.2%. Fortive pays an annual dividend of $0.28 per share and has a dividend yield of 0.5%. AB SKF pays out 56.6% of its earnings in the form of a dividend. Fortive pays out 16.6% 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. Fortive has increased its dividend for 2 consecutive years.

Valuation and Earnings

This table compares AB SKF and Fortive”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AB SKF	$9.36 billion	1.35	$401.34 million	$1.06	26.25
Fortive	$4.16 billion	4.22	$579.20 million	$1.69	34.36

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

Profitability

This table compares AB SKF and Fortive’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AB SKF	5.05%	13.27%	6.91%
Fortive	12.38%	15.33%	8.23%

Insider and Institutional Ownership

0.1% of AB SKF shares are held by institutional investors. Comparatively, 94.9% of Fortive shares are held by institutional investors. 0.7% of Fortive shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk & Volatility

AB SKF has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500. Comparatively, Fortive has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for AB SKF and Fortive, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AB SKF	1	4	1	0	2.00
Fortive	2	9	2	0	2.00

Fortive has a consensus price target of $61.64, indicating a potential upside of 6.14%. Given Fortive’s higher possible upside, analysts clearly believe Fortive is more favorable than AB SKF.

Summary

Fortive beats AB SKF on 13 of the 16 factors compared between the two stocks.

About AB SKF

AB SKF (publ) designs, manufactures, and sells bearings and units, seals, lubrication systems, condition monitoring, and services worldwide. It operates in two segments, Industrial and Automotive. The company offers rolling, mounted and housings, super-precision, slewing, plain, magnetic, and thin section bearings; industrial and automotive seals; lubricants, manual lubrication tools, lubricators, automatic lubrication systems, and lubrication system components; maintenance products, such as hydraulic, mechanical, and alignment tools, as well as heaters; belts, pulleys, chains, sprockets, bushings and hubs, couplings, and bolts and tightening systems; condition monitoring systems; test and measuring equipment, such as waviness and roundness analyzers, noise and vibration testers, and grease test rigs, as well as calibration with traceability, machine training and support, and upgrades and refurbishment services; and vehicle aftermarket products. It also provides application engineering services consisting of technical consultancy, numerical simulation and design, and root cause analysis; asset management services, such as assessment and benchmarking, maintenance strategy review, spare parts and inventory management, and lubrication management; condition-based maintenance, including vibration analysis and diagnostics, thermography, lubrication analysis, and condition monitoring system installation; mechanical maintenance comprising mounting and dismounting, precision alignment, and balancing; remanufacturing and customization; and training solutions, which include instructor-led training, e-learning courses, and webinar recordings. The company serves the aerospace, agriculture, automotive, construction, food and beverage, general machinery, machine tools, marine, material handling, metals, mining, mineral processing, ocean energy, pulp and paper, railways, and wind industries. AB SKF (publ) was incorporated in 1907 and is headquartered in Gothenburg, Sweden.

About Fortive

Fortive Corporation designs, develops, manufactures, and services professional and engineered products, software, and services in the United States, China, and internationally. It operates in three segments: Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions. The Intelligent Operating Solutions segment provides advanced instrumentation, software, and services, including electrical test and measurement, facility and asset lifecycle software applications, and connected worker safety and compliance solutions for manufacturing, process industries, healthcare, utilities and power, communications and electronics, and other industries. This segment markets its products and services under the ACCRUENT, FLUKE, GORDIAN, INDUSTRIAL SCIENTIFIC, INTELEX, PRUFTECHNIK, and SERVICECHANNEL brands. The Precision Technologies segment offers electrical test and measurement, sensing and material technologies for industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries under the ANDERSON-NEGELE, GEMS, SETRA, HENGSTLER-DYNAPAR, QUALITROL, PACIFIC SCIENTIFIC, KEITHLEY, and TEKTRONIX brand names. The Advanced Healthcare Solutions segment provides critical workflow solutions comprising instrument sterilization, instrument tracking, design and manufacture of cell therapy equipment, biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions under the ASP, CENSIS, CENSITRAC, EVOTECH, FLUKE BIOMEDICAL, INVETECH, LANDAUER, PROVATION, RAYSAFE, and STERRAD brands. Fortive Corporation was incorporated in 2015 and is headquartered in Everett, Washington.