Insteel Industries (NASDAQ: IIIN) and Encore Wire Corporation (NASDAQ:WIRE) are both small-cap industrial products companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, profitability, risk, earnings, analyst recommendations and valuation.

Volatility & Risk

Insteel Industries has a beta of 2.13, meaning that its share price is 113% more volatile than the S&P 500. Comparatively, Encore Wire Corporation has a beta of 2.24, meaning that its share price is 124% more volatile than the S&P 500.

Profitability

This table compares Insteel Industries and Encore Wire Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Insteel Industries 7.24% 13.30% 10.06%
Encore Wire Corporation 4.01% 7.42% 6.43%

Dividends

Insteel Industries pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Encore Wire Corporation pays an annual dividend of $0.08 per share and has a dividend yield of 0.2%. Insteel Industries pays out 8.1% of its earnings in the form of a dividend. Encore Wire Corporation pays out 4.0% 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.

Insider and Institutional Ownership

81.3% of Insteel Industries shares are held by institutional investors. Comparatively, 89.1% of Encore Wire Corporation shares are held by institutional investors. 5.7% of Insteel Industries shares are held by company insiders. Comparatively, 3.8% of Encore Wire Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Insteel Industries and Encore Wire Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Insteel Industries $395.10 million 1.20 $57.39 million $1.49 16.69
Encore Wire Corporation $1.05 billion 0.88 $78.58 million $2.01 22.06

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Insteel Industries and Encore Wire Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Insteel Industries 0 1 1 0 2.50
Encore Wire Corporation 0 1 0 0 2.00

Summary

Insteel Industries beats Encore Wire Corporation on 8 of the 15 factors compared between the two stocks.

About Insteel Industries

Insteel Industries, Inc. is a manufacturer of steel wire reinforcing products for concrete construction applications. The Company’s operations are focused on the manufacture and marketing of steel wire reinforcing products for concrete construction applications. Its concrete reinforcing products consist of two product lines: prestressed concrete strand (PC strand) and welded wire reinforcement (WWR). PC strand is a seven-wire strand that is used to impart compression forces into precast concrete elements and structures, providing reinforcement for bridges, parking decks, buildings and other concrete structures. WWR is produced as an engineered reinforcing product for use in nonresidential and residential construction. Its products are sold primarily to manufacturers of concrete products that are used in nonresidential construction. The Company sells its products nationwide across the United States, Canada, Mexico, and Central and South America.

About Encore Wire Corporation

Encore Wire Corporation is a manufacturer of electrical building wire and cable. The Company is a supplier of building wire for interior electrical wiring in commercial and industrial buildings, homes, apartments, and manufactured housing. The Company manufactures electric building wire, principally NM-B cable, for use primarily as interior wiring in homes, apartments and manufactured housing, and THHN/THWN-2 cable and metal-clad and armored cable for use primarily as wiring in commercial and industrial buildings. It offers an electrical building wire product line that consists primarily of UF-B cable and other types of wire products, including metal-clad and armored cable. All of these products are manufactured with copper or aluminum as the conductor. NM-B cable consists of either two or three insulated copper wire conductors, with an uninsulated ground wire, all sheathed in a polyvinyl chloride (PVC) jacket.

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