Critical Review: POSCO (PKX) & Olympic Steel (ZEUS)
POSCO (NYSE: PKX) and Olympic Steel (NASDAQ:ZEUS) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.
Volatility & Risk
POSCO has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500. Comparatively, Olympic Steel has a beta of 1.74, meaning that its share price is 74% more volatile than the S&P 500.
This is a summary of recent ratings and recommmendations for POSCO and Olympic Steel, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Olympic Steel has a consensus price target of $22.33, indicating a potential upside of 14.59%. Given Olympic Steel’s higher probable upside, analysts clearly believe Olympic Steel is more favorable than POSCO.
This table compares POSCO and Olympic Steel’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
POSCO pays an annual dividend of $0.55 per share and has a dividend yield of 0.7%. Olympic Steel pays an annual dividend of $0.08 per share and has a dividend yield of 0.4%. POSCO pays out 9.9% of its earnings in the form of a dividend. Olympic Steel pays out 10.7% 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. POSCO is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider and Institutional Ownership
5.1% of POSCO shares are owned by institutional investors. Comparatively, 68.1% of Olympic Steel shares are owned by institutional investors. 0.0% of POSCO shares are owned by company insiders. Comparatively, 18.3% of Olympic Steel shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares POSCO and Olympic Steel’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|POSCO||$50.91 billion||0.46||$6.18 billion||$5.58||13.20|
|Olympic Steel||$1.21 billion||0.18||$36.12 million||$0.75||25.99|
POSCO has higher revenue and earnings than Olympic Steel. POSCO is trading at a lower price-to-earnings ratio than Olympic Steel, indicating that it is currently the more affordable of the two stocks.
POSCO beats Olympic Steel on 11 of the 16 factors compared between the two stocks.
POSCO is a Korea-based company principally engaged in the manufacture and distribution of steel products. The Company operates in four segments: steel, trading, construction, and others. The steel segment includes production of steel products and sale of such products. The trading segment consists of global trading activities of POSCO Daewoo Corporation, exporting and importing a range of steel products that are both obtained from and supplied to it, as well as between other suppliers and purchasers in Korea and overseas. The construction segment includes planning, designing and construction of industrial plants, civil engineering projects, and commercial and residential buildings, both in Korea and overseas. The others segment includes power generation, liquefied natural gas (LNG) logistics, and network and system integration.
About Olympic Steel
Olympic Steel, Inc. is a metals service center. The Company provides metals processing and distribution services for a range of customers. The Company operates through three segments: carbon flat products, specialty metals flat products, and tubular and pipe products. The Company’s carbon flat products segment’s focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. The Company’s specialty metals flat products segment’s focus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. The Company’s tubular and pipe products segment consists of the Chicago Tube and Iron Company (CTI) business. Through its tubular and pipe products segment, it distributes metals tubing, pipe, bar, valve and fittings, and fabricate pressure parts supplied to various industrial markets.
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