Financial Analysis: NL Industries (NL) vs. Emerson Electric (EMR)
NL Industries (NYSE: NL) and Emerson Electric (NYSE:EMR) are both basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.
This table compares NL Industries and Emerson Electric’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Emerson Electric pays an annual dividend of $1.92 per share and has a dividend yield of 3.0%. NL Industries does not pay a dividend. Emerson Electric pays out 85.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Emerson Electric has increased its dividend for 60 consecutive years.
Valuation and Earnings
This table compares NL Industries and Emerson Electric’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|NL Industries||$114.69 million||4.04||$8.15 million||$1.37||6.93|
|Emerson Electric||$14.76 billion||2.77||$3.18 billion||$2.25||28.41|
Emerson Electric has higher revenue and earnings than NL Industries. NL Industries is trading at a lower price-to-earnings ratio than Emerson Electric, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings for NL Industries and Emerson Electric, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
NL Industries currently has a consensus target price of $6.00, indicating a potential downside of 36.84%. Emerson Electric has a consensus target price of $62.00, indicating a potential downside of 3.00%. Given Emerson Electric’s stronger consensus rating and higher probable upside, analysts plainly believe Emerson Electric is more favorable than NL Industries.
Volatility & Risk
NL Industries has a beta of 2.75, suggesting that its share price is 175% more volatile than the S&P 500. Comparatively, Emerson Electric has a beta of 1.22, suggesting that its share price is 22% more volatile than the S&P 500.
Institutional and Insider Ownership
9.6% of NL Industries shares are held by institutional investors. Comparatively, 70.0% of Emerson Electric shares are held by institutional investors. 0.1% of NL Industries shares are held by insiders. Comparatively, 0.8% of Emerson Electric shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Emerson Electric beats NL Industries on 11 of the 17 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.
Emerson Electric Company Profile
Emerson Electric Co. is a diversified global manufacturing company, which provides solutions to customers by bringing technology and engineering together in the industrial, commercial and consumer markets around the world. The Company operates through four segments based on the nature of the products and services rendered: Process Management, Industrial Automation, Climate Technologies and Commercial & Residential Solutions. The Company’s principal production operations are electronics assembly, metal stamping, forming, casting, machining, welding, plating, heat treating, painting and assembly. In addition, the Company uses specialized production operations, including automatic and semiautomatic testing, automated material handling and storage, ferrous and nonferrous machining, and special furnaces for heat treating and foundry applications. The Company provides measurement, control and diagnostic technologies for automated industrial processes.
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