Key Technology (NASDAQ: KTEC) and MSC Industrial Direct Company (NYSE:MSM) are both industrial products companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, dividends, institutional ownership, valuation, profitabiliy and analyst recommendations.

Dividends

MSC Industrial Direct Company pays an annual dividend of $1.80 per share and has a dividend yield of 2.2%. Key Technology does not pay a dividend. MSC Industrial Direct Company pays out 45.6% of its earnings in the form of a dividend. MSC Industrial Direct Company has increased its dividend for 6 consecutive years.

Valuation and Earnings

This table compares Key Technology and MSC Industrial Direct Company’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Key Technology $121.45 million 0.70 $7.10 million $0.21 62.86
MSC Industrial Direct Company $2.86 billion 1.66 $449.64 million $3.95 21.10

MSC Industrial Direct Company has higher revenue and earnings than Key Technology. MSC Industrial Direct Company is trading at a lower price-to-earnings ratio than Key Technology, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Key Technology has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, MSC Industrial Direct Company has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Key Technology and MSC Industrial Direct Company, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Key Technology 0 0 0 0 N/A
MSC Industrial Direct Company 1 7 5 0 2.31

MSC Industrial Direct Company has a consensus price target of $94.55, indicating a potential upside of 13.45%. Given MSC Industrial Direct Company’s higher probable upside, analysts plainly believe MSC Industrial Direct Company is more favorable than Key Technology.

Profitability

This table compares Key Technology and MSC Industrial Direct Company’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Key Technology 1.11% 2.16% 1.37%
MSC Industrial Direct Company 8.19% 19.39% 11.52%

Institutional and Insider Ownership

44.9% of Key Technology shares are owned by institutional investors. Comparatively, 78.1% of MSC Industrial Direct Company shares are owned by institutional investors. 29.4% of Key Technology shares are owned by insiders. Comparatively, 31.3% of MSC Industrial Direct Company shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

MSC Industrial Direct Company beats Key Technology on 13 of the 16 factors compared between the two stocks.

Key Technology Company Profile

Key Technology, Inc. is a supplier of process automation solutions to the food processing industry and other industries, such as tobacco and pharmaceuticals. The Company designs, manufactures, sells and services automation equipment that processes product streams of discrete pieces. These systems integrate electro-optical automated inspection and digital sorting systems with other processing systems that include specialized conveying and preparation equipment. The Company provides parts and service for each of its product lines to customers around the world. Its automated inspection systems are used in various applications to detect and remove defects and foreign material from the product stream. It offers conveying and processing equipment, which are utilized throughout various industries to move and process product within a production plant. Its Integrated Solutions Group (ISG) provides integrated whole-line solutions. It has an installed base of inspection and processing systems.

MSC Industrial Direct Company Company Profile

MSC Industrial Direct Co., Inc. is a North American distributor of metalworking and maintenance, repair and operations (MRO) products and services. The Company’s range of MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components and electrical supplies. The Company serves a range of customers throughout the United States, Canada and the United Kingdom, from individual machine shops, to manufacturing companies, to government agencies, such as the General Services Administration and the Department of Defense. The Company also serves durable and non-durable goods manufacturing, education and healthcare markets, among others. As of September 3, 2016, the Company had operated a network of 12 customer fulfillment centers.

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