NL Industries (NYSE: NL) and Kimball Electronics (NASDAQ:KE) are both small-cap basic materials companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, profitability, institutional ownership, risk, analyst recommendations and earnings.

Profitability

This table compares NL Industries and Kimball Electronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NL Industries 57.98% 32.04% 16.44%
Kimball Electronics 3.67% 9.24% 5.74%

Analyst Recommendations

This is a summary of recent ratings for NL Industries and Kimball Electronics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NL Industries 1 0 0 0 1.00
Kimball Electronics 0 0 1 0 3.00

NL Industries presently has a consensus target price of $6.00, suggesting a potential downside of 31.03%. Kimball Electronics has a consensus target price of $17.00, suggesting a potential downside of 18.66%. Given Kimball Electronics’ stronger consensus rating and higher probable upside, analysts clearly believe Kimball Electronics is more favorable than NL Industries.

Volatility and Risk

NL Industries has a beta of 2.7, meaning that its share price is 170% more volatile than the S&P 500. Comparatively, Kimball Electronics has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500.

Valuation & Earnings

This table compares NL Industries and Kimball Electronics’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NL Industries $114.69 million 3.70 $8.15 million $1.37 6.35
Kimball Electronics $930.91 million 0.60 $62.96 million $1.24 16.85

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

Insider & Institutional Ownership

9.6% of NL Industries shares are owned by institutional investors. Comparatively, 56.9% of Kimball Electronics shares are owned by institutional investors. 0.1% of NL Industries shares are owned by company insiders. Comparatively, 3.2% of Kimball Electronics 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.

Summary

Kimball Electronics beats NL Industries on 8 of the 14 factors compared between the two stocks.

NL Industries Company Profile

NL Industries, Inc. is a holding company. The Company operates in the component products industry through its subsidiary, CompX International Inc. (CompX). The Company operates in the chemicals industry through its non-controlling interest in Kronos Worldwide, Inc. (Kronos). The Company, through Compx, manufactures engineered components that are sold to a range of industries, including recreational transportation (including boats), postal, office and institutional furniture, cabinetry, tool storage, healthcare, gas stations and vending equipment. Kronos is a global producer and marketer of value-added titanium dioxide pigments (TiO2), a base industrial product used in imparting whiteness, brightness and opacity to a range of customer applications and end use markets, including coatings, plastics, paper, inks, food, cosmetics, and other industrial and consumer products. Kronos has production facilities in Europe and North America.

Kimball Electronics Company Profile

Kimball Electronics, Inc. (Kimball Electronics) is an electronics manufacturing services (EMS) company. The Company is engaged in producing electronics for the automotive, medical, industrial and public safety markets. It provides design, engineering, manufacturing, packaging and distribution of electronic assemblies and circuit boards on a contract basis to a range of industries. The Company offers various engineering, manufacturing and supply chain services, such as design services; production and testing of printed circuit board assemblies (PCBAS); industrialization and automation of manufacturing processes; product design and process validation and qualification; reliability testing, which include testing of products under a series of environmental conditions; assembly, production and packaging of other related non-electronic products, and product life cycle management. It is engaged in producing safety critical electronic assemblies for the automotive market.

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