Timken Steel Corporation (NYSE: TMST) and Handy & Harman (NASDAQ:HNH) are both small-cap basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.

Risk & Volatility

Timken Steel Corporation has a beta of 2.3, meaning that its stock price is 130% more volatile than the S&P 500. Comparatively, Handy & Harman has a beta of 1.4, meaning that its stock price is 40% more volatile than the S&P 500.

Profitability

This table compares Timken Steel Corporation and Handy & Harman’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Timken Steel Corporation -8.13% -14.32% -7.91%
Handy & Harman 5.07% 27.77% 6.04%

Institutional and Insider Ownership

75.6% of Timken Steel Corporation shares are owned by institutional investors. Comparatively, 88.2% of Handy & Harman shares are owned by institutional investors. 8.1% of Timken Steel Corporation shares are owned by company insiders. Comparatively, 6.1% of Handy & Harman shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Timken Steel Corporation and Handy & Harman’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Timken Steel Corporation $1.08 billion 0.72 -$29.80 million ($1.99) -8.83
Handy & Harman $957.45 million 0.39 $110.27 million $0.71 42.68

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

Analyst Recommendations

This is a breakdown of current ratings for Timken Steel Corporation and Handy & Harman, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Timken Steel Corporation 0 3 1 0 2.25
Handy & Harman 0 0 0 0 N/A

Timken Steel Corporation presently has a consensus price target of $19.67, indicating a potential upside of 11.93%. Given Timken Steel Corporation’s higher probable upside, equities research analysts plainly believe Timken Steel Corporation is more favorable than Handy & Harman.

Timken Steel Corporation Company Profile

TimkenSteel Corporation manufactures alloy steel, as well as carbon and micro-alloy steel. The Company’s portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing and precision steel components. In addition, the Company supplies machining and thermal treatment services, as well as manage raw material recycling programs, which are used as a feeder system for its melt operations. The Company’s products include SBQ Steel and Seamless Mechanical Steel Tubing, and Value-added Precision Products and Services. Its focus is on alloy steel. The Company manufactures carbon, micro-alloy and alloy steel, sold as ingots, bars and tubes. In addition to its customized steels, the Company also manufactures custom-make precision components. Its products and services are used in a range of demanding applications in the market sectors, such as oil and gas, industrial equipment, mining and power generation.

Handy & Harman Company Profile

Handy & Harman Ltd. is a holding company. The Company, through its subsidiaries, is a diversified manufacturer of engineered industrial products. The Company’s segments include Joining Materials, Tubing, Building Materials, Performance Materials, Electrical Products, and Kasco Blades and Route Repair Services (Kasco). Joining Materials fabricates precious metals and their alloys into brazing alloys. Tubing manufactures a range of steel tubing products. Building Materials manufactures and supplies products to the commercial construction and building industries. Performance Materials manufactures sheet and mechanically formed glass manufactures sheet and mechanically formed glass, quartz, carbon and aramid materials. Electrical Products segment designs, manufactures and markets power electronics and power protection, among others. Kasco provides meat-room blade products, repair services and resale products for the meat and deli departments of supermarkets and restaurants, among others.

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