Contrasting USA Rare Earth (NASDAQ:USAR) and Worthington Steel (NYSE:WS)

Worthington Steel (NYSE:WS) and USA Rare Earth (NASDAQ:USAR) are both mid-cap materials companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, risk, earnings, analyst recommendations, dividends and valuation.

Volatility & Risk

Worthington Steel has a beta of 2.24, suggesting that its stock price is 124% more volatile than the S&P 500. Comparatively, USA Rare Earth has a beta of 2.66, suggesting that its stock price is 166% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Worthington Steel and USA Rare Earth, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Worthington Steel	1	1	1	0	2.00
USA Rare Earth	1	0	10	0	2.82

Worthington Steel currently has a consensus target price of $46.00, suggesting a potential upside of 16.54%. USA Rare Earth has a consensus target price of $33.71, suggesting a potential upside of 216.12%. Given USA Rare Earth’s stronger consensus rating and higher possible upside, analysts plainly believe USA Rare Earth is more favorable than Worthington Steel.

Institutional and Insider Ownership

45.4% of Worthington Steel shares are held by institutional investors. 2.7% of Worthington Steel shares are held by insiders. Comparatively, 9.1% of USA Rare Earth shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Worthington Steel and USA Rare Earth’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Worthington Steel	-0.56%	7.49%	3.14%
USA Rare Earth	N/A	-9.04%	-7.13%

Earnings & Valuation

This table compares Worthington Steel and USA Rare Earth”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Worthington Steel	$5.30 billion	0.38	$8.50 million	($0.61)	-64.70
USA Rare Earth	$13.16 million	198.29	-$297.56 million	($2.43)	-4.39

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

Summary

USA Rare Earth beats Worthington Steel on 8 of the 14 factors compared between the two stocks.

About Worthington Steel

Worthington Steel, Inc. operates as a steel processor in North America. It offers carbon flat-rolled steel and tailor welded blanks, as well as electrical steel laminations; and aluminum tailor welded blanks. The company serves various end-markets, including automotive, heavy truck, agriculture, construction, and energy. Worthington Steel, Inc. was incorporated in 2023 and is based in Columbus, Ohio.

About USA Rare Earth

USA Rare Earth, Inc. is domestic supplier of rare earth magnets and heavy rare earth elements. It is developing a vertically integrated, domestic supply chain for rare earth element magnet production, with a facility in Stillwater, Oklahoma, and mining rights to the Round Top heavy rare earth and critical minerals deposit in West Texas. The company was founded in May 2019 and is headquartered in Stillwater, OK.