Financial Analysis: Mueller Industries (NYSE:MLI) & Illinois Tool Works (NYSE:ITW)

Illinois Tool Works (NYSE:ITW) and Mueller Industries (NYSE:MLI) are both large-cap industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Illinois Tool Works and Mueller Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Illinois Tool Works	5	7	1	0	1.69
Mueller Industries	0	0	2	0	3.00

Illinois Tool Works presently has a consensus price target of $273.42, indicating a potential upside of 1.08%. Mueller Industries has a consensus price target of $75.00, indicating a potential upside of 23.44%. Given Mueller Industries’ stronger consensus rating and higher probable upside, analysts plainly believe Mueller Industries is more favorable than Illinois Tool Works.

Profitability

This table compares Illinois Tool Works and Mueller Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Illinois Tool Works	19.39%	101.72%	19.64%
Mueller Industries	18.25%	25.68%	21.80%

Earnings & Valuation

This table compares Illinois Tool Works and Mueller Industries”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Illinois Tool Works	$16.04 billion	4.80	$3.07 billion	$11.03	24.52
Mueller Industries	$4.18 billion	3.22	$765.19 million	$3.84	15.82

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

Dividends

Illinois Tool Works pays an annual dividend of $6.88 per share and has a dividend yield of 2.5%. Mueller Industries pays an annual dividend of $0.70 per share and has a dividend yield of 1.2%. Illinois Tool Works pays out 62.4% of its earnings in the form of a dividend. Mueller Industries pays out 18.2% 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. Illinois Tool Works has increased its dividend for 55 consecutive years and Mueller Industries has increased its dividend for 5 consecutive years. Illinois Tool Works is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Illinois Tool Works has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500. Comparatively, Mueller Industries has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Institutional & Insider Ownership

79.8% of Illinois Tool Works shares are owned by institutional investors. Comparatively, 94.5% of Mueller Industries shares are owned by institutional investors. 0.8% of Illinois Tool Works shares are owned by insiders. Comparatively, 2.3% of Mueller Industries shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Illinois Tool Works beats Mueller Industries on 9 of the 17 factors compared between the two stocks.

About Illinois Tool Works

Illinois Tool Works Inc. manufactures and sells industrial products and equipment in the United States and internationally. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses. The Food Equipment segment provides warewashing, refrigeration, cooking, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services. The Test & Measurement and Electronics segment produces and sells equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. The Welding segment produces arc welding equipment; and metal arc welding consumables and related accessories. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment offers engineered fastening systems and solutions for the residential construction, renovation/remodel, and commercial construction markets. The Specialty Products segment provides beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. It serves the automotive OEM and tiers, MRO, commercial food equipment, construction, general industrial, industrial capital goods, consumer durables, automotive aftermarket end, and other markets. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912 and is based in Glenview, Illinois.

About Mueller Industries

Mueller Industries, Inc. manufactures and sells copper, brass, aluminum, and plastic products in the United States, the United Kingdom, Canada, South Korea, the Middle East, China, and Mexico. It operates through three segments: Piping Systems, Industrial Metals, and Climate. The Piping Systems segment offers copper tubes, fittings, line sets, and pipe nipples. It also resells steel pipes, brass and plastic plumbing valves, malleable iron fittings and faucets, and plumbing specialties; and supplies water tubes. This segment sells its products to wholesalers in the plumbing and refrigeration markets, distributors to the manufactured housing and recreational vehicle industries, building material retailers, and air-conditioning original equipment manufacturers (OEMs). The Industrial Metals segment manufactures brass, bronze, and copper alloy rods; plumbing brass, valves, fittings, and gas assemblies; cold-form aluminum and copper products; machining of aluminum, steel, brass, and cast iron impacts and castings; brass and aluminum forgings; brass, aluminum, and stainless-steel valves; fluid control solutions; and gas train assembles to OEMs in the industrial, construction, HVAC, plumbing, and refrigeration markets. The Climate segment offers valves, protection devices, and brass fittings for various OEMs in the commercial HVAC and refrigeration markets; high-pressure components and accessories for the air-conditioning and refrigeration markets; coaxial heat exchangers and twisted tubes for the HVAC, geothermal, refrigeration, swimming pool heat pump, marine, ice machine, commercial boiler, and heat reclamation markets; and insulated HVAC flexible duct systems. Mueller Industries, Inc. was founded in 1917 and is headquartered in Collierville, Tennessee.