Essendant (NASDAQ: ESND) and HNI Corporation (NYSE:HNI) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, earnings, risk, analyst recommendations, institutional ownership, dividends and valuation.

Risk and Volatility

Essendant has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500. Comparatively, HNI Corporation has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500.

Dividends

Essendant pays an annual dividend of $0.56 per share and has a dividend yield of 4.1%. HNI Corporation pays an annual dividend of $1.14 per share and has a dividend yield of 2.7%. Essendant pays out -13.7% of its earnings in the form of a dividend. HNI Corporation pays out 81.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Essendant has increased its dividend for 5 consecutive years. Essendant is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Essendant and HNI Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essendant 0 2 0 0 2.00
HNI Corporation 1 1 3 0 2.40

Essendant presently has a consensus target price of $16.50, suggesting a potential upside of 20.61%. HNI Corporation has a consensus target price of $44.50, suggesting a potential upside of 5.63%. Given Essendant’s higher possible upside, research analysts clearly believe Essendant is more favorable than HNI Corporation.

Valuation & Earnings

This table compares Essendant and HNI Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Essendant $5.19 billion 0.10 $147.50 million ($4.08) -3.35
HNI Corporation $2.16 billion 0.86 $220.67 million $1.40 30.09

HNI Corporation has higher revenue, but lower earnings than Essendant. Essendant is trading at a lower price-to-earnings ratio than HNI Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

94.1% of Essendant shares are owned by institutional investors. Comparatively, 69.0% of HNI Corporation shares are owned by institutional investors. 1.6% of Essendant shares are owned by insiders. Comparatively, 5.2% of HNI Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Essendant and HNI Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Essendant -2.87% 5.75% 1.93%
HNI Corporation 2.94% 20.82% 7.77%

Summary

HNI Corporation beats Essendant on 11 of the 17 factors compared between the two stocks.

Essendant Company Profile

Essendant Inc. (Essendant) is a wholesale distributor of workplace items. The Company’s product portfolio includes Janitorial, Foodservice and Breakroom Supplies (JanSan), Technology Products, Traditional Office Products, Industrial Supplies, Cut Sheet Paper Products, Automotive Products and Office Furniture. It operates principally within the United States, with additional operations in Canada and Dubai, the United Arab Emirates (UAE). As of December 31, 2016, the Company provided access to over 22,000 items in these lines: janitorial supplies (cleaners and cleaning accessories), breakroom items (food and beverage products), foodservice consumables (such as disposable cups, plates and utensils), safety and security items, and paper and packaging supplies. As of December 31, 2016, the Company provided access to approximately 11,000 items, including imaging supplies, data storage, digital cameras, computer accessories and computer hardware items, such as printers and other peripherals.

HNI Corporation Company Profile

HNI Corporation is a provider of office furniture and hearth products. The Company’s office furniture products include panel-based and freestanding furniture systems, seating, storage and tables. The Company’s segments include office furniture and hearth products. The office furniture segment manufactures and markets a line of metal and wood commercial and home office furniture, which includes storage products, desks, credenzas, chairs, tables, bookcases, freestanding office partitions, and panel systems and other related products. The hearth products segment manufactures and markets a line of gas, electric, wood and biomass burning fireplaces, inserts, stoves, facings and accessories, principally for the home. It offers hearth products under various brands, such as Heatilator, Heat & Glo, Majestic, Monessen, Quadra-Fire, Harman Stove, Vermont Castings and PelPro. Its office furniture products are sold under various brands, such as HON, OFM, basyx by HON, Lamex and ERGO.

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