Alamo Group (NYSE: ALG) and Deere & (NYSE:DE) are both industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, analyst recommendations, profitability, earnings and risk.

Valuation & Earnings

This table compares Alamo Group and Deere &’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alamo Group $850.95 million 1.24 $93.56 million $3.89 23.44
Deere & $26.78 billion 1.51 $3.98 billion $5.55 22.83

Deere & has higher revenue and earnings than Alamo Group. Deere & is trading at a lower price-to-earnings ratio than Alamo Group, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings for Alamo Group and Deere &, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alamo Group 0 1 1 0 2.50
Deere & 3 12 10 0 2.28

Alamo Group presently has a consensus price target of $85.00, indicating a potential downside of 6.78%. Deere & has a consensus price target of $122.99, indicating a potential downside of 2.93%. Given Deere &’s higher possible upside, analysts clearly believe Deere & is more favorable than Alamo Group.

Dividends

Alamo Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.4%. Deere & pays an annual dividend of $2.40 per share and has a dividend yield of 1.9%. Alamo Group pays out 10.3% of its earnings in the form of a dividend. Deere & pays out 43.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Alamo Group has raised its dividend for 2 consecutive years.

Profitability

This table compares Alamo Group and Deere &’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alamo Group 5.32% 11.78% 7.57%
Deere & 6.52% 24.85% 3.05%

Insider & Institutional Ownership

89.0% of Alamo Group shares are owned by institutional investors. Comparatively, 67.4% of Deere & shares are owned by institutional investors. 4.0% of Alamo Group shares are owned by insiders. Comparatively, 0.9% of Deere & shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Alamo Group has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500. Comparatively, Deere & has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.

Summary

Deere & beats Alamo Group on 10 of the 17 factors compared between the two stocks.

Alamo Group Company Profile

Alamo Group Inc. is engaged in the design and manufacture of agricultural equipment and infrastructure maintenance equipment for governmental and industrial use. The Company operates in Industrial, Agricultural and European segments. The Company’s products include tractor-mounted mowing and other vegetation maintenance equipment, street sweepers, excavators, vacuum trucks, snow removal equipment, pothole patchers, zero turn radius mowers, agricultural implements and related aftermarket. As of December 31, 2016, the Company operated 24 plants in North America, Europe, Australia and Brazil. The Company sells its products through a network of independent dealers and distributors to Governmental end users, related independent contractors, as well as to the agricultural and commercial turf markets. It also offers replacement parts for each of its wholegoods lines. The Company’s products are sold through various marketing organizations, and dealer and distributor networks.

Deere & Company Profile

Deere & Company is engaged in equipment operations. The Company is engaged in providing financial services. The Company operates through three business segments: agriculture and turf, construction and forestry, and financial services. The agriculture and turf segment manufactures and distributes a line of agriculture and turf equipment and related service parts. The construction and forestry segment provides a line of construction equipment, and forestry machines and attachments available in the world. The construction and forestry segment is also engaged in providing fleet management telematics solutions. The financial services segment primarily finances sales and leases by the Company dealers of new and used agriculture and turf equipment and construction and forestry equipment. The financial services segment also provides wholesale financing to dealers of the foregoing equipment, finances retail revolving charge accounts and offers extended equipment warranties.

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