Steel Dynamics (NASDAQ: STLD) and Carpenter Technology Corporation (NYSE:CRS) are both mid-cap basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, institutional ownership, profitability and earnings.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Steel Dynamics and Carpenter Technology Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Steel Dynamics 0 5 11 0 2.69
Carpenter Technology Corporation 0 3 3 0 2.50

Steel Dynamics presently has a consensus price target of $41.53, indicating a potential upside of 10.05%. Carpenter Technology Corporation has a consensus price target of $46.60, indicating a potential downside of 4.94%. Given Steel Dynamics’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Steel Dynamics is more favorable than Carpenter Technology Corporation.

Dividends

Steel Dynamics pays an annual dividend of $0.62 per share and has a dividend yield of 1.6%. Carpenter Technology Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 1.5%. Steel Dynamics pays out 28.6% of its earnings in the form of a dividend. Carpenter Technology Corporation pays out 44.4% 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. Steel Dynamics is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

82.9% of Steel Dynamics shares are held by institutional investors. Comparatively, 92.9% of Carpenter Technology Corporation shares are held by institutional investors. 4.2% of Steel Dynamics shares are held by company insiders. Comparatively, 4.5% of Carpenter Technology Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Steel Dynamics and Carpenter Technology Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Steel Dynamics 5.79% 21.45% 9.25%
Carpenter Technology Corporation 4.06% 6.67% 2.77%

Volatility and Risk

Steel Dynamics has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500. Comparatively, Carpenter Technology Corporation has a beta of 2.09, suggesting that its stock price is 109% more volatile than the S&P 500.

Valuation & Earnings

This table compares Steel Dynamics and Carpenter Technology Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Steel Dynamics $8.77 billion 1.03 $1.37 billion $2.17 17.39
Carpenter Technology Corporation $1.80 billion 1.27 $213.50 million $1.62 30.26

Steel Dynamics has higher revenue and earnings than Carpenter Technology Corporation. Steel Dynamics is trading at a lower price-to-earnings ratio than Carpenter Technology Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Steel Dynamics beats Carpenter Technology Corporation on 11 of the 16 factors compared between the two stocks.

Steel Dynamics Company Profile

Steel Dynamics, Inc. is a steel producing and a metal recycling company. The Company is engaged in the manufacture and sale of steel products, processing and sale of recycled ferrous and nonferrous metals, and fabrication and sale of steel joists and deck products. Its segments include steel operations, metals recycling operations, steel fabrication operations and Other Operations. It offers a range of steel products, such as sheet products, long products and steel finishing. The steel operations segment includes Butler Flat Roll Division, Columbus Flat Roll Division, The Techs galvanizing lines, Structural and Rail Division, Engineered Bar Products Division, Roanoke Bar Division, Steel of West Virginia and Iron Dynamics. The metals recycling operations segment consists of OmniSource Corporation. The fabrication operations produce steel building components. The Other Operations segment consists of subsidiary operations and smaller joint ventures.

Carpenter Technology Corporation Company Profile

Carpenter Technology Corporation is engaged in the manufacturing, fabrication and distribution of specialty metals. The Company’s segments include Specialty Alloys Operations (SAO) and Performance Engineered Products (PEP). Its SAO segment consists of alloy and stainless steel manufacturing operations. Its PEP segment includes the Dynamet titanium business, the Carpenter Powder Products business, the Amega West business, the Specialty Steel Supply business and the Latrobe and Mexico distribution businesses. It develops, manufactures and distributes cast/wrought and powder metal stainless steels, and special alloys, including high temperature (iron-nickel-cobalt base), stainless, corrosion resistant, controlled expansion alloys, ultra-high strength and implantable alloys, tool and die steels and other specialty metals, as well as cast/wrought titanium alloys. The Company manufactures and rents down-hole drilling tools and components used in the oil and gas industry.

Receive News & Ratings for Steel Dynamics Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Steel Dynamics Inc. and related companies with MarketBeat.com's FREE daily email newsletter.