Graco (NYSE: GGG) and Colfax Corporation (NYSE:CFX) are both mid-cap industrial products companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitabiliy, analyst recommendations, institutional ownership, risk, valuation, earnings and dividends.

Analyst Recommendations

This is a summary of current ratings and price targets for Graco and Colfax Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Graco 0 4 0 0 2.00
Colfax Corporation 1 4 5 0 2.40

Graco currently has a consensus price target of $95.50, indicating a potential downside of 13.89%. Colfax Corporation has a consensus price target of $41.67, indicating a potential upside of 7.72%. Given Colfax Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Colfax Corporation is more favorable than Graco.

Risk & Volatility

Graco has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500. Comparatively, Colfax Corporation has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500.

Valuation & Earnings

This table compares Graco and Colfax Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Graco $1.36 billion 4.53 $378.14 million $1.06 104.63
Colfax Corporation $3.62 billion 1.31 $445.21 million $1.17 33.06

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

Profitability

This table compares Graco and Colfax Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Graco 4.53% 35.25% 16.42%
Colfax Corporation 3.98% 6.29% 3.06%

Dividends

Graco pays an annual dividend of $1.44 per share and has a dividend yield of 1.3%. Colfax Corporation does not pay a dividend. Graco pays out 135.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Graco has raised its dividend for 12 consecutive years.

Insider & Institutional Ownership

90.8% of Graco shares are held by institutional investors. Comparatively, 77.2% of Colfax Corporation shares are held by institutional investors. 5.7% of Graco shares are held by insiders. Comparatively, 10.6% of Colfax Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Colfax Corporation beats Graco on 9 of the 17 factors compared between the two stocks.

Graco Company Profile

Graco Inc. designs, manufactures and markets systems and equipment used to move, measure, control, dispense and spray fluid and powder materials. The Company specializes in equipment for applications that involve materials with viscosities, materials with abrasive or corrosive properties, and multiple-component materials that require ratio control. The Company operates through three segments: Industrial, Process and Contractor. The Industrial segment markets equipment and pre-engineered packages for moving and applying paints, coatings, sealants, adhesives and other fluids. The Process segment markets pumps, valves, meters and accessories to move and dispense chemicals, oil and natural gas, water, wastewater, petroleum, food, lubricants and other fluids. The Contractor segment markets sprayers for architectural coatings for painting, corrosion control, texture and line striping. Its equipment is used in the manufacturing, processing, construction and maintenance industries.

Colfax Corporation Company Profile

Colfax Corporation is an industrial manufacturing and engineering company. The Company provides gas and fluid handling and fabrication technology products and services to customers around the world. The Company’s segments include Gas and Fluid Handling, and Fabrication Technology. The Gas and Fluid Handling segment supplies a range of gas and fluid handling products, including heavy-duty centrifugal and axial fans, rotary heat exchangers, gas compressors, pumps and certain related products, as well as aftermarket and lubrication-related services, which serves customers in the power generation, oil, gas and petrochemical, mining, marine (including defense) and general industrial and other end markets. The Fabrication Technology segment supplies welding equipment and consumables, cutting equipment and consumables, and automated welding and cutting systems. It formulates, develops, manufactures and supplies consumable products and equipment.

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