Head-To-Head Review: Japan Steel Works (OTCMKTS:JPSWY) vs. Kadant (NYSE:KAI)

Japan Steel Works (OTCMKTS:JPSWY) and Kadant (NYSE:KAI) are both mid-cap industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Valuation and Earnings

This table compares Japan Steel Works and Kadant”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Japan Steel Works	$1.83 billion	2.05	$126.98 million	$0.87	29.22
Kadant	$1.05 billion	3.26	$101.97 million	$8.77	33.10

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Japan Steel Works and Kadant, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Japan Steel Works	0	1	1	0	2.50
Kadant	0	3	1	0	2.25

Kadant has a consensus target price of $341.50, indicating a potential upside of 17.65%. Given Kadant’s higher probable upside, analysts clearly believe Kadant is more favorable than Japan Steel Works.

Dividends

Japan Steel Works pays an annual dividend of $0.17 per share and has a dividend yield of 0.7%. Kadant pays an annual dividend of $1.44 per share and has a dividend yield of 0.5%. Japan Steel Works pays out 19.5% of its earnings in the form of a dividend. Kadant pays out 16.4% 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. Kadant has increased its dividend for 12 consecutive years.

Volatility & Risk

Japan Steel Works has a beta of 0.35, suggesting that its share price is 65% less volatile than the S&P 500. Comparatively, Kadant has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.

Insider and Institutional Ownership

96.1% of Kadant shares are owned by institutional investors. 1.3% of Kadant shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Japan Steel Works and Kadant’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Japan Steel Works	7.01%	8.48%	4.24%
Kadant	9.45%	12.13%	7.33%

Summary

Kadant beats Japan Steel Works on 12 of the 16 factors compared between the two stocks.

About Japan Steel Works

The Japan Steel Works, Ltd. engages in the provision of industrial machinery products, and material and engineering business in Japan and internationally. It operates through Industrial Machinery Products Business, and Material and Engineering Business segments. The Industrial Machinery Products Business segment offers plastic production and processing machinery, such as pelletizers, film and sheet manufacturing equipment, and twin-screw extruders; molding machines including plastic injection molding, magnesium injection molding, and blow molding machines; and other machinery consists of excimer laser annealing systems, defense equipment, railway products, hot press devices, vacuum laminators, and deposit systems, as well as after-sales services for plastics, mobility, high-performance batteries, electronic devices, and defense applications. The Material and Engineering Business segment provides steel casting and forgings, such as reactor and steam generator parts, rotor shafts, turbine casings, die steel, steel rolls for steel manufacturing, and clad steel plates; and engineering and other services, including design and analysis, welded structures, inspection and survey, and hydrogen pressure accumulators and related products for use in power generation equipment, renewable energy, and infrastructure applications. The company offers photonics, composite materials, and metallic materials for use in semiconductors and electronic devices, cameras and sensing devices, aircraft and mobility components, and electronic parts. The Japan Steel Works, Ltd. was founded in 1907 and is headquartered in Shinagawa, Japan.

About Kadant

Kadant Inc. supplies technologies and engineered systems worldwide. It operates in three segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment develops, manufactures, and markets fluid-handling systems and equipment, such as rotary joints, syphons, turbulator bars, expansion joints, and engineered steam and condensate systems; and doctoring, cleaning, and filtration systems and related consumables consisting of doctor systems and holders, doctor blades, cleaning shower and fabric-conditioning systems, forming systems and wear surfaces, and water-filtration systems. The Industrial Processing segment develops, manufactures, and markets ring and rotary debarkers, stranders, chippers, engineered knife systems, industrial automation and control, recycling and approach flow systems, and virgin pulping process equipment for use in the packaging, tissue, wood products, and alternative fuel industries. The Material Handling segment offers conveying and vibratory equipment, and baling products; and manufactures and sells biodegradable absorbent granules for carriers in agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption. The company markets and sells its products, services, and systems through direct sales, independent sales agents, and distributors. The company was formerly known as Thermo Fibertek, Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was incorporated in 1991 and is headquartered in Westford, Massachusetts.