Twin Disc (NASDAQ:TWIN) & Atlas Copco (OTCMKTS:ATLKY) Critical Review

Atlas Copco (OTCMKTS:ATLKY) and Twin Disc (NASDAQ:TWIN) are both industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Dividends

Atlas Copco pays an annual dividend of $0.35 per share and has a dividend yield of 1.7%. Twin Disc pays an annual dividend of $0.16 per share and has a dividend yield of 0.7%. Atlas Copco pays out 61.4% of its earnings in the form of a dividend. Twin Disc pays out 8.7% 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.

Earnings & Valuation

This table compares Atlas Copco and Twin Disc”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atlas Copco	$17.21 billion	5.93	$2.70 billion	$0.57	36.77
Twin Disc	$340.74 million	0.98	-$1.89 million	$1.84	12.62

Atlas Copco has higher revenue and earnings than Twin Disc. Twin Disc is trading at a lower price-to-earnings ratio than Atlas Copco, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Atlas Copco and Twin Disc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Atlas Copco	15.66%	23.81%	12.91%
Twin Disc	7.32%	2.77%	1.29%

Volatility & Risk

Atlas Copco has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500. Comparatively, Twin Disc has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500.

Insider & Institutional Ownership

0.0% of Atlas Copco shares are owned by institutional investors. Comparatively, 65.2% of Twin Disc shares are owned by institutional investors. 22.1% of Twin Disc shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Atlas Copco and Twin Disc, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atlas Copco	2	2	6	1	2.55
Twin Disc	0	1	2	0	2.67

Twin Disc has a consensus target price of $30.00, indicating a potential upside of 29.20%. Given Twin Disc’s stronger consensus rating and higher probable upside, analysts clearly believe Twin Disc is more favorable than Atlas Copco.

Summary

Atlas Copco beats Twin Disc on 11 of the 17 factors compared between the two stocks.

About Atlas Copco

Atlas Copco AB provides compressed air and gas, vacuum, energy, dewatering and industrial pump, industrial power tool, and assembly and machine vision solutions in North America, South America, Europe, Africa, the Middle East, Asia, and Oceania. It operates through Compressor Technique, Vacuum Technique, Industrial Technique, and Power Technique segments. The company offers piston compressors, oil-free tooth and scroll compressors, rotary screw compressors, oil-free blowers, oil-free centrifugal compressors, gas and process compressors, air and gas treatment equipment, expanders and pumps, and medical air solutions. It also provides oil-sealed rotary vane, dry, and liquid ring vacuum pumps; turbomolecular and cryogenic pumps; abatement and integrated systems; industrial assembly tools and solutions; self-pierce riveting solutions; adhesive dispensing and flow drill fastening equipment; material removal tools, and drills and other pneumatic products; machine vision solutions; construction and demolition tools; mobile compressors, generators, and energy storage systems; and industrial flow, portable power, portable flow, and portable air products, as well as specialty rental services. The company serves the semiconductor and flat panel, industrial manufacturing, civil engineering, demolition, exploration drilling, automotive, off-highway vehicles, electronics, aerospace, energy, food, pharmaceutical, textile, and other industries. Atlas Copco AB was founded in 1873 and is headquartered in Nacka, Sweden.

About Twin Disc

Twin Disc, Incorporated engages in the design, manufacture, and sale of marine and heavy duty off-highway power transmission equipment in the United States, the Netherlands, China, Australia, Italy, and internationally. The company operates in two segments, Manufacturing and Distribution. Its principal products include marine transmissions, azimuth drives, surface drives, propellers, and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and controls systems. The company also provides third-party manufactured products. It sells its products through a direct sales force and distributor network to customers primarily in the pleasure craft, commercial marine, patrol, and military marine markets, as well as in the energy and natural resources, government, agriculture, recycling, construction, oil and gas, and industrial markets. The company was incorporated in 1918 and is headquartered in Milwaukee, Wisconsin.