Schnitzer Steel Industries (NASDAQ: SCHN) and Timken Steel Corporation (NYSE:TMST) are both small-cap basic materials companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitabiliy, earnings, valuation, dividends, institutional ownership and risk.

Earnings & Valuation

This table compares Schnitzer Steel Industries and Timken Steel Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Schnitzer Steel Industries $1.46 billion 0.36 $88.74 million $1.33 14.47
Timken Steel Corporation $961.00 million 0.60 -$42.70 million ($2.26) -5.74

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

Profitability

This table compares Schnitzer Steel Industries and Timken Steel Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Schnitzer Steel Industries 2.53% 7.88% 4.39%
Timken Steel Corporation -10.34% -15.69% -9.06%

Volatility & Risk

Schnitzer Steel Industries has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500. Comparatively, Timken Steel Corporation has a beta of 2.27, meaning that its stock price is 127% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Schnitzer Steel Industries and Timken Steel Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Schnitzer Steel Industries 0 1 0 0 2.00
Timken Steel Corporation 0 2 1 0 2.33

Timken Steel Corporation has a consensus price target of $19.75, suggesting a potential upside of 52.27%. Given Timken Steel Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Timken Steel Corporation is more favorable than Schnitzer Steel Industries.

Dividends

Schnitzer Steel Industries pays an annual dividend of $0.75 per share and has a dividend yield of 3.9%. Timken Steel Corporation does not pay a dividend. Schnitzer Steel Industries pays out 56.4% of its earnings in the form of a dividend.

Insider & Institutional Ownership

85.9% of Schnitzer Steel Industries shares are held by institutional investors. Comparatively, 75.2% of Timken Steel Corporation shares are held by institutional investors. 3.8% of Schnitzer Steel Industries shares are held by company insiders. Comparatively, 8.1% of Timken Steel Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Schnitzer Steel Industries beats Timken Steel Corporation on 8 of the 15 factors compared between the two stocks.

About Schnitzer Steel Industries

Schnitzer Steel Industries, Inc. is a recycler of ferrous and nonferrous scrap metal, including end-of-life vehicles, and a manufacturer of finished steel products. The Company operates through two segments: the Auto and Metals Recycling (AMR) business and the Steel Manufacturing Business (SMB). The AMR segment collects and recycles auto bodies, rail cars, home appliances, industrial machinery, manufacturing scrap and construction and demolition scrap from bridges, buildings and other infrastructure. AMR’s primary products include recycled ferrous and nonferrous scrap metal. The SMB segment produces finished steel products such as rebar, wire rod, coiled rebar, merchant bar and other specialty products using 100% recycled metal sourced from AMR. SMB’s products are primarily used in nonresidential and infrastructure construction in North America. SMB operates a steel mini-mill in McMinnville, Oregon that produces finished steel products using recycled metal and other raw materials.

About Timken Steel Corporation

TimkenSteel Corporation manufactures alloy steel, as well as carbon and micro-alloy steel. The Company’s portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing and precision steel components. In addition, the Company supplies machining and thermal treatment services, as well as manage raw material recycling programs, which are used as a feeder system for its melt operations. The Company’s products include SBQ Steel and Seamless Mechanical Steel Tubing, and Value-added Precision Products and Services. Its focus is on alloy steel. The Company manufactures carbon, micro-alloy and alloy steel, sold as ingots, bars and tubes. In addition to its customized steels, the Company also manufactures custom-make precision components. Its products and services are used in a range of demanding applications in the market sectors, such as oil and gas, industrial equipment, mining and power generation.

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