Ampco-Pittsburgh Corporation (NYSE: AP) and Xylem (NYSE:XYL) are both industrial products companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Earnings & Valuation

This table compares Ampco-Pittsburgh Corporation and Xylem’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ampco-Pittsburgh Corporation $389.05 million 0.42 $8.08 million ($5.94) -2.26
Xylem $4.23 billion 2.54 $723.00 million $1.55 38.66

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

Profitability

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

Net Margins Return on Equity Return on Assets
Ampco-Pittsburgh Corporation -18.73% -25.72% -7.33%
Xylem 6.58% 17.26% 6.40%

Dividends

Ampco-Pittsburgh Corporation pays an annual dividend of $0.36 per share and has a dividend yield of 2.7%. Xylem pays an annual dividend of $0.72 per share and has a dividend yield of 1.2%. Ampco-Pittsburgh Corporation pays out -6.1% 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. Ampco-Pittsburgh Corporation has raised its dividend for 4 consecutive years. Ampco-Pittsburgh Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

55.9% of Ampco-Pittsburgh Corporation shares are owned by institutional investors. Comparatively, 87.2% of Xylem shares are owned by institutional investors. 29.9% of Ampco-Pittsburgh Corporation shares are owned by company insiders. Comparatively, 0.8% of Xylem shares are owned by company 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.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Ampco-Pittsburgh Corporation and Xylem, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ampco-Pittsburgh Corporation 0 0 1 0 3.00
Xylem 0 4 10 0 2.71

Ampco-Pittsburgh Corporation currently has a consensus price target of $22.00, suggesting a potential upside of 63.57%. Xylem has a consensus price target of $58.75, suggesting a potential downside of 1.97%. Given Ampco-Pittsburgh Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Ampco-Pittsburgh Corporation is more favorable than Xylem.

Volatility and Risk

Ampco-Pittsburgh Corporation has a beta of 1.55, indicating that its share price is 55% more volatile than the S&P 500. Comparatively, Xylem has a beta of 1.18, indicating that its share price is 18% more volatile than the S&P 500.

Summary

Xylem beats Ampco-Pittsburgh Corporation on 9 of the 16 factors compared between the two stocks.

About Ampco-Pittsburgh Corporation

Ampco-Pittsburgh Corporation is engaged in manufacturing and selling specialty metal products and customized equipment utilized by industry throughout the world. The Company operates through two segments: the Forged and Cast Engineered Products segment, and the Air and Liquid Processing segment. The Forged and Cast Engineered Products segment consists of Union Electric Steel Corporation (Union Electric Steel or UES) and Union Electric Steel UK Limited (UES-UK). The Air and Liquid Processing segment includes Aerofin, Buffalo Air Handling and Buffalo Pumps, all divisions of Air & Liquid Systems Corporation (Air and Liquid), a subsidiary of the Company. Union Electric Steel produces ingot and forged products that service a range of industries across the globe. UES-UK produces cast rolls for hot and cold strip mills, medium/heavy section mills and plate mills in a range of iron and steel qualities.

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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