Emerson Electric (NYSE: EMR) and Kimball Electronics (NASDAQ:KE) are both industrial products companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, profitabiliy, analyst recommendations, institutional ownership, earnings, valuation and dividends.

Analyst Ratings

This is a summary of current ratings and recommmendations for Emerson Electric and Kimball Electronics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emerson Electric 1 12 3 0 2.13
Kimball Electronics 0 0 1 0 3.00

Emerson Electric presently has a consensus price target of $57.43, suggesting a potential downside of 5.72%. Kimball Electronics has a consensus price target of $17.00, suggesting a potential downside of 10.41%. Given Emerson Electric’s higher probable upside, equities analysts clearly believe Emerson Electric is more favorable than Kimball Electronics.

Valuation and Earnings

This table compares Emerson Electric and Kimball Electronics’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Emerson Electric $14.76 billion 2.66 $3.15 billion $2.25 27.07
Kimball Electronics $930.91 million 0.55 $66.39 million $1.24 15.30

Emerson Electric has higher revenue and earnings than Kimball Electronics. Kimball Electronics is trading at a lower price-to-earnings ratio than Emerson Electric, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Emerson Electric has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500. Comparatively, Kimball Electronics has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500.

Profitability

This table compares Emerson Electric and Kimball Electronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emerson Electric 8.89% 22.32% 9.25%
Kimball Electronics 3.67% 9.32% 5.82%

Institutional and Insider Ownership

69.1% of Emerson Electric shares are owned by institutional investors. Comparatively, 57.4% of Kimball Electronics shares are owned by institutional investors. 0.8% of Emerson Electric shares are owned by company insiders. Comparatively, 3.2% of Kimball Electronics shares are owned by company 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.

Dividends

Emerson Electric pays an annual dividend of $1.92 per share and has a dividend yield of 3.2%. Kimball Electronics does not pay a dividend. Emerson Electric pays out 85.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kimball Electronics has increased its dividend for 60 consecutive years.

Summary

Emerson Electric beats Kimball Electronics on 13 of the 17 factors compared between the two stocks.

Emerson Electric Company Profile

Emerson Electric Co. is a diversified global manufacturing company, which provides solutions to customers by bringing technology and engineering together in the industrial, commercial and consumer markets around the world. The Company operates through four segments based on the nature of the products and services rendered: Process Management, Industrial Automation, Climate Technologies and Commercial & Residential Solutions. The Company’s principal production operations are electronics assembly, metal stamping, forming, casting, machining, welding, plating, heat treating, painting and assembly. In addition, the Company uses specialized production operations, including automatic and semiautomatic testing, automated material handling and storage, ferrous and nonferrous machining, and special furnaces for heat treating and foundry applications. The Company provides measurement, control and diagnostic technologies for automated industrial processes.

Kimball Electronics Company Profile

Kimball Electronics, Inc. (Kimball Electronics) is an electronics manufacturing services (EMS) company. The Company is engaged in producing electronics for the automotive, medical, industrial and public safety markets. It provides design, engineering, manufacturing, packaging and distribution of electronic assemblies and circuit boards on a contract basis to a range of industries. The Company offers various engineering, manufacturing and supply chain services, such as design services; production and testing of printed circuit board assemblies (PCBAS); industrialization and automation of manufacturing processes; product design and process validation and qualification; reliability testing, which include testing of products under a series of environmental conditions; assembly, production and packaging of other related non-electronic products, and product life cycle management. It is engaged in producing safety critical electronic assemblies for the automotive market.

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