Commercial Metals (NYSE: CMC) and Northwest Pipe (NASDAQ:NWPX) are both basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, dividends, risk and earnings.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Commercial Metals and Northwest Pipe, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Commercial Metals 2 3 3 0 2.13
Northwest Pipe 0 1 0 0 2.00

Commercial Metals presently has a consensus target price of $20.75, suggesting a potential upside of 15.79%. Northwest Pipe has a consensus target price of $9.00, suggesting a potential downside of 50.79%. Given Commercial Metals’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Commercial Metals is more favorable than Northwest Pipe.

Valuation & Earnings

This table compares Commercial Metals and Northwest Pipe’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Commercial Metals $4.82 billion 0.43 $306.06 million $0.65 27.57
Northwest Pipe $138.62 million 1.27 -$4.17 million $0.06 304.83

Commercial Metals has higher revenue and earnings than Northwest Pipe. Commercial Metals is trading at a lower price-to-earnings ratio than Northwest Pipe, indicating that it is currently the more affordable of the two stocks.

Dividends

Commercial Metals pays an annual dividend of $0.48 per share and has a dividend yield of 2.7%. Northwest Pipe does not pay a dividend. Commercial Metals pays out 73.8% of its earnings in the form of a dividend.

Volatility & Risk

Commercial Metals has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, Northwest Pipe has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500.

Profitability

This table compares Commercial Metals and Northwest Pipe’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Commercial Metals 1.57% 7.84% 3.42%
Northwest Pipe 0.45% -1.90% -1.65%

Insider and Institutional Ownership

90.6% of Commercial Metals shares are held by institutional investors. Comparatively, 83.5% of Northwest Pipe shares are held by institutional investors. 1.3% of Commercial Metals shares are held by company insiders. Comparatively, 2.0% of Northwest Pipe shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Commercial Metals beats Northwest Pipe on 11 of the 15 factors compared between the two stocks.

Commercial Metals Company Profile

Commercial Metals Company, together with its subsidiaries, manufactures, recycles and markets steel and metal products, related materials and services through a network. The Company’s Americas Recycling segment processes scrap metals for use as a raw material by manufacturers of new metal products. The Americas Mills segment consists of steel mills, commonly referred to as minimills that produce reinforcing bar (rebar), angles, flats and rounds. Its Americas Fabrication segment consists of its steel fabrication facilities that bend, weld, cut and fabricate steel, primarily rebar. Its International Mill segment consists of its mill, recycling and fabrication operations located in Poland. Its International Marketing and Distribution segment includes international operations for the sales, distribution and processing of primary and secondary metals, fabricated metals, semi-finished, long and flat steel products, and other industrial products.

Northwest Pipe Company Profile

Northwest Pipe Company is a manufacturer of engineered steel pipe water systems. The Company operates through two segments. The Water Transmission segment produces steel pipeline systems for use in drinking water infrastructure, and has approximately eight manufacturing facilities, located in Portland, Oregon; Denver, Colorado; Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas; St. Louis, Missouri; Salt Lake City, Utah, and Monterrey, Mexico. The Tubular Products segment produces steel line pipe products for energy applications, and has a manufacturing facility located in Atchison, Kansas. The Company, through Water Transmission Group, produces engineered welded steel pipe products for use in water transmission applications. It also manufactures smaller diameter electric resistance welded (ERW) steel pipe through its Tubular Products Group. The Company’s solutions-based products are used in water transmission, plant piping, tunnels and river crossings applications.

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