IDEX Corporation (NYSE: IEX) and Xylem (NYSE:XYL) are both mid-cap industrial products companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, risk, earnings, valuation and analyst recommendations.

Volatility and Risk

IDEX Corporation has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500. Comparatively, Xylem has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.

Earnings & Valuation

This table compares IDEX Corporation and Xylem’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
IDEX Corporation $2.19 billion 3.95 $554.19 million $3.73 30.33
Xylem $4.23 billion 2.51 $723.00 million $1.55 38.14

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

Insider & Institutional Ownership

98.7% of IDEX Corporation shares are held by institutional investors. Comparatively, 87.2% of Xylem shares are held by institutional investors. 1.0% of IDEX Corporation shares are held by company insiders. Comparatively, 0.8% of Xylem shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for IDEX Corporation and Xylem, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
IDEX Corporation 0 9 1 0 2.10
Xylem 0 4 10 0 2.71

IDEX Corporation presently has a consensus price target of $101.57, indicating a potential downside of 10.21%. Xylem has a consensus price target of $58.75, indicating a potential downside of 0.63%. Given Xylem’s stronger consensus rating and higher probable upside, analysts plainly believe Xylem is more favorable than IDEX Corporation.

Profitability

This table compares IDEX Corporation and Xylem’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
IDEX Corporation 13.12% 19.01% 9.60%
Xylem 7.08% 16.02% 5.94%

Dividends

IDEX Corporation pays an annual dividend of $1.48 per share and has a dividend yield of 1.3%. Xylem pays an annual dividend of $0.72 per share and has a dividend yield of 1.2%. IDEX Corporation pays out 39.7% of its earnings in the form of a dividend. Xylem pays out 46.5% 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. IDEX Corporation has increased its dividend for 7 consecutive years and Xylem has increased its dividend for 4 consecutive years. IDEX Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

IDEX Corporation beats Xylem on 12 of the 17 factors compared between the two stocks.

About IDEX Corporation

IDEX Corporation (IDEX) operates an applied solutions business that sells pumps, flow meters and other fluidics systems, and components and engineered products. The Company operates through three segments: Fluid & Metering Technologies (FMT), Health & Science Technologies (HST) and Fire & Safety/Diversified Products (FSDP). With its segments, as of December 31, 2016, the Company maintained 13 platforms, where it focused on growth and acquisitions. The Company’s FMT segment provides flow monitoring and other services for the food, chemical, general industrial, water and wastewater, agricultural and energy industries. The HST segment designs, produces and distributes precision fluidics, rotary lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems. Its FSDP segment produces firefighting pumps and controls, rescue tools, lifting bags and other components and systems; engineered stainless steel banding and clamping devices, and precision equipment.

About Xylem

Xylem Inc. is a water technology company. The Company designs, manufactures and services engineered solutions across a range of critical applications. It is an equipment and service provider for water and wastewater applications with a portfolio of products and services addressing the cycle of water, from collection, distribution and use to the return of water to the environment. It has three business segments, which include Water Infrastructure, Applied Water and Sensus. Water Infrastructure focuses on the transportation, treatment and testing of water, offering a range of products, including water and wastewater pumps, and controls and systems. Applied Water serves the uses of water and focuses on the residential, commercial, industrial and agricultural markets. The Sensus segment’s products include metering, networked communications, measurement and control technologies, software and services, including cloud-based analytics, remote monitoring and data management.

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