Critical Contrast: ESCO Technologies (NYSE:ESE) versus CNH Industrial (NYSE:CNH)

ESCO Technologies (NYSE:ESE) and CNH Industrial (NYSE:CNH) are both industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, risk, valuation, dividends, profitability, analyst recommendations and institutional ownership.

Valuation & Earnings

This table compares ESCO Technologies and CNH Industrial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ESCO Technologies	$1.10 billion	5.85	$299.22 million	$12.14	20.38
CNH Industrial	$18.09 billion	0.79	$510.00 million	$0.25	46.10

CNH Industrial has higher revenue and earnings than ESCO Technologies. ESCO Technologies is trading at a lower price-to-earnings ratio than CNH Industrial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares ESCO Technologies and CNH Industrial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ESCO Technologies	24.39%	13.28%	8.69%
CNH Industrial	1.71%	6.78%	1.24%

Risk & Volatility

ESCO Technologies has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500. Comparatively, CNH Industrial has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.

Institutional and Insider Ownership

95.7% of ESCO Technologies shares are held by institutional investors. Comparatively, 59.9% of CNH Industrial shares are held by institutional investors. 0.7% of ESCO Technologies shares are held by company insiders. Comparatively, 0.2% of CNH Industrial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

ESCO Technologies pays an annual dividend of $0.32 per share and has a dividend yield of 0.1%. CNH Industrial pays an annual dividend of $0.10 per share and has a dividend yield of 0.9%. ESCO Technologies pays out 2.6% of its earnings in the form of a dividend. CNH Industrial pays out 40.0% 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.

Analyst Recommendations

This is a breakdown of current ratings and price targets for ESCO Technologies and CNH Industrial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ESCO Technologies	0	1	3	1	3.00
CNH Industrial	1	6	8	0	2.47

ESCO Technologies presently has a consensus price target of $381.50, indicating a potential upside of 54.19%. CNH Industrial has a consensus price target of $13.43, indicating a potential upside of 16.56%. Given ESCO Technologies’ stronger consensus rating and higher possible upside, research analysts plainly believe ESCO Technologies is more favorable than CNH Industrial.

Summary

ESCO Technologies beats CNH Industrial on 11 of the 17 factors compared between the two stocks.

About ESCO Technologies

ESCO Technologies Inc. produces and supplies engineered products and systems for industrial and commercial markets worldwide. It operates through three segments: Aerospace & Defense, Utility Solutions Group, and RF Test & Measurement. The Aerospace & Defense segment designs and manufactures filtration products, including hydraulic filter elements and fluid control devices used in commercial aerospace applications; filter mechanisms used in micro-propulsion devices for satellites; and custom designed filters for manned aircraft and submarines. It also designs, develops, and manufactures elastomeric-based signature reduction solutions for U.S. naval vessels; and mission-critical bushings, pins, sleeves, and precision-tolerance machined components for landing gear, rotor heads, engine mounts, flight controls, and actuation systems for the aerospace and defense industries. The Utility Solutions Group segment provides diagnostic testing solutions that enable electric power grid operators to assess the integrity of high-voltage power delivery equipment; and decision support tools for the renewable energy industry, primarily wind and solar. The RF Test & Measurement segment designs and manufactures RF test and secure communication facilities, acoustic test enclosures, RF and magnetically shielded rooms, RF measurement systems, and broadcast and recording studios; and RF absorptive materials, filters, antennas, field probes, test cells, proprietary measurement software, and other test accessories to perform various tests. The company distributes its products through a network of distributors, sales representatives, direct sales teams, and in-house sales personnel. The company was incorporated in 1990 and is based in Saint Louis, Missouri.

About CNH Industrial

CNH Industrial NV is an equipment and services company, which develops, manufactures and sells specialized machines and services for the farming and construction industries, and supplies replacement parts and accessories. It operates through the following operating segments: Agriculture, Construction, and Financial Services. The Agriculture segment designs, manufactures, and distributes a full line of farm machinery and implements, including two-wheel and four-wheel drive tractors, crawler tractors, combines, grape and sugar cane harvesters, hay and forage equipment, planting and seeding equipment, soil preparation and cultivation implements and material handling equipment. The Construction segment comprises of a full line of construction equipment including excavators, crawler dozers, graders, wheel loaders, backhoe loaders, skid steer loaders, and compact track loaders. The Financial Services segment offers retail note and lease financing to end-use customers for the purchase of new and used agricultural and construction equipment and components. The company was founded in 1866 and is headquartered in London, the United Kingdom.