Nucor Corporation (NYSE: NUE) and Carpenter Technology Corporation (NYSE:CRS) are both basic materials companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, earnings, risk, valuation, institutional ownership and profitability.

Dividends

Nucor Corporation pays an annual dividend of $1.51 per share and has a dividend yield of 2.7%. Carpenter Technology Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 1.9%. Nucor Corporation pays out 43.8% of its earnings in the form of a dividend. Carpenter Technology Corporation pays out 72.0% 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. Carpenter Technology Corporation has raised its dividend for 43 consecutive years. Nucor Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Nucor Corporation has a beta of 1.51, suggesting that its stock price is 51% more volatile than the S&P 500. Comparatively, Carpenter Technology Corporation has a beta of 2.08, suggesting that its stock price is 108% more volatile than the S&P 500.

Valuation and Earnings

This table compares Nucor Corporation and Carpenter Technology Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nucor Corporation $18.24 billion 0.97 $2.67 billion $3.45 16.11
Carpenter Technology Corporation $1.80 billion 0.99 $218.20 million $1.00 37.69

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

Institutional & Insider Ownership

76.0% of Nucor Corporation shares are owned by institutional investors. Comparatively, 95.6% of Carpenter Technology Corporation shares are owned by institutional investors. 0.7% of Nucor Corporation shares are owned by company insiders. Comparatively, 3.6% of Carpenter Technology Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Nucor Corporation and Carpenter Technology Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nucor Corporation 6.08% 13.39% 7.20%
Carpenter Technology Corporation 2.61% 4.48% 1.83%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Nucor Corporation and Carpenter Technology Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nucor Corporation 0 4 11 0 2.73
Carpenter Technology Corporation 0 2 3 0 2.60

Nucor Corporation currently has a consensus price target of $69.10, indicating a potential upside of 24.35%. Carpenter Technology Corporation has a consensus price target of $43.40, indicating a potential upside of 15.15%. Given Nucor Corporation’s stronger consensus rating and higher probable upside, research analysts clearly believe Nucor Corporation is more favorable than Carpenter Technology Corporation.

Summary

Nucor Corporation beats Carpenter Technology Corporation on 11 of the 17 factors compared between the two stocks.

Nucor Corporation Company Profile

Nucor Corporation (Nucor) manufactures steel and steel products. The Company produces direct reduced iron (DRI) for use in its steel mills. It operates in three segments: steel mills, steel products and raw materials. The steel mills segment produces and distributes sheet steel (hot-rolled, cold-rolled and galvanized), plate steel, structural steel (wide-flange beams, beam blanks, H-piling and sheet piling) and bar steel (blooms, billets, concrete reinforcing bar, merchant bar, wire rod and special bar quality). The steel products segment produces steel joists and joist girders, steel deck, fabricated concrete reinforcing steel and cold finished steel. The raw materials produces DRI; brokers ferrous and nonferrous metals, pig iron, HBI and DRI; supplies ferro-alloys, and processes ferrous and nonferrous scrap metal. It also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron (HBI) and DRI.

Carpenter Technology Corporation Company Profile

Carpenter Technology Corporation is engaged in the manufacturing, fabrication and distribution of specialty metals. The Company’s segments include Specialty Alloys Operations (SAO) and Performance Engineered Products (PEP). Its SAO segment consists of alloy and stainless steel manufacturing operations. Its PEP segment includes the Dynamet titanium business, the Carpenter Powder Products business, the Amega West business, the Specialty Steel Supply business and the Latrobe and Mexico distribution businesses. It develops, manufactures and distributes cast/wrought and powder metal stainless steels, and special alloys, including high temperature (iron-nickel-cobalt base), stainless, corrosion resistant, controlled expansion alloys, ultra-high strength and implantable alloys, tool and die steels and other specialty metals, as well as cast/wrought titanium alloys. The Company manufactures and rents down-hole drilling tools and components used in the oil and gas industry.

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