AZZ (NYSE: AZZ) and American Superconductor (NASDAQ:AMSC) are both small-cap industrial products companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.

Institutional and Insider Ownership

85.4% of AZZ shares are held by institutional investors. Comparatively, 41.6% of American Superconductor shares are held by institutional investors. 0.0% of AZZ shares are held by company insiders. Comparatively, 2.6% of American Superconductor shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares AZZ and American Superconductor’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AZZ $820.18 million 1.51 $143.90 million $1.97 24.14
American Superconductor $70.77 million 1.20 -$21.56 million ($2.14) -2.07

AZZ has higher revenue and earnings than American Superconductor. American Superconductor is trading at a lower price-to-earnings ratio than AZZ, indicating that it is currently the more affordable of the two stocks.

Dividends

AZZ pays an annual dividend of $0.68 per share and has a dividend yield of 1.4%. American Superconductor does not pay a dividend. AZZ pays out 34.5% of its earnings in the form of a dividend. AZZ has raised its dividend for 3 consecutive years.

Risk & Volatility

AZZ has a beta of 1.52, meaning that its share price is 52% more volatile than the S&P 500. Comparatively, American Superconductor has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for AZZ and American Superconductor, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AZZ 0 1 0 0 2.00
American Superconductor 0 1 5 0 2.83

AZZ currently has a consensus target price of $52.00, indicating a potential upside of 9.36%. American Superconductor has a consensus target price of $7.33, indicating a potential upside of 65.17%. Given American Superconductor’s stronger consensus rating and higher possible upside, analysts plainly believe American Superconductor is more favorable than AZZ.

Profitability

This table compares AZZ and American Superconductor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AZZ 6.27% 9.65% 5.13%
American Superconductor -170.93% -99.04% -59.73%

Summary

AZZ beats American Superconductor on 11 of the 16 factors compared between the two stocks.

AZZ Company Profile

AZZ Inc. is a provider of galvanizing services, welding solutions, specialty electrical equipment and engineered services to the power generation, transmission, distribution, refining and industrial markets. The Company operates through two segments: Energy segment and Galvanizing segment. Its Energy segment provides products and services designed to support industrial, nuclear and electrical applications. Its product offerings include custom switchgear, electrical enclosures, medium and high voltage bus ducts, explosion proof and hazardous duty lighting, nuclear safety-related equipment and tubular products. Its Galvanizing segment provides hot dip galvanizing to the steel fabrication industry through facilities located throughout the United States and Canada. It serves fabricators or manufacturers that provide services to the electrical and telecommunications, bridge and highway, petrochemical and general industrial markets and various original equipment manufacturers.

American Superconductor Company Profile

American Superconductor Corporation (AMSC) is a provider of megawatt-scale solutions. The Company operates through two segments: Wind and Grid. Through the Company’s Windtec Solutions brand, the Wind business segment enables manufacturers to field wind turbines. Through the Company’s Gridtec Solutions, the Grid business segment enables electric utilities and renewable energy project developers to connect, transmit and distribute power. AMSC supplies power electronics and control systems, licenses its engineered wind turbine designs and provides customer support services to wind turbine manufacturers. The Company provides a range of power electronics and software-based control systems. AMSC provides transmission planning services that enable it to identify power grid congestion and other risks. The Company also sells grid interconnection solutions for wind farms and solar power plants, power quality systems, and transmission and distribution cable systems.

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