Critical Comparison: Barnes Group (B) and Timken (TKR)

Barnes Group (NYSE: B) and Timken (NYSE:TKR) are both mid-cap industrial products companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, dividends, risk, profitability, analyst recommendations, earnings and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations for Barnes Group and Timken, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Barnes Group 0 3 3 0 2.50
Timken 0 2 1 0 2.33

Barnes Group presently has a consensus target price of $65.60, suggesting a potential upside of 1.05%. Timken has a consensus target price of $51.33, suggesting a potential upside of 4.34%. Given Timken’s higher probable upside, analysts clearly believe Timken is more favorable than Barnes Group.

Profitability

This table compares Barnes Group and Timken’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Barnes Group 11.20% 12.44% 6.96%
Timken 6.88% 13.75% 6.25%

Earnings and Valuation

This table compares Barnes Group and Timken’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Barnes Group $1.23 billion 2.83 $135.60 million $2.84 22.86
Timken $2.67 billion 1.43 $152.60 million $2.51 19.60

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

Dividends

Barnes Group pays an annual dividend of $0.56 per share and has a dividend yield of 0.9%. Timken pays an annual dividend of $1.08 per share and has a dividend yield of 2.2%. Barnes Group pays out 19.7% of its earnings in the form of a dividend. Timken pays out 43.0% 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. Barnes Group has increased its dividend for 4 consecutive years and Timken has increased its dividend for 3 consecutive years.

Institutional and Insider Ownership

86.0% of Barnes Group shares are held by institutional investors. Comparatively, 79.3% of Timken shares are held by institutional investors. 8.5% of Barnes Group shares are held by insiders. Comparatively, 11.1% of Timken shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Barnes Group has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500. Comparatively, Timken has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500.

Summary

Barnes Group beats Timken on 10 of the 17 factors compared between the two stocks.

About Barnes Group

Barnes Group Inc. is an industrial and aerospace manufacturer and service provider, serving a range of end markets and customers. The Company’s engineered products, industrial technologies, and solutions are used in applications that provide transportation, manufacturing, healthcare products and technology to the world. Its segments include Industrial and Aerospace. The Industrial segment is engaged in the manufacturing of precision parts, products and systems for applications serving a customer base in end-markets, such as transportation, industrial equipment, consumer products, packaging, electronics, medical devices and energy. The Industrial segment includes the Molding Solutions, Nitrogen Gas Products and Engineered Components business units. The Aerospace segment includes the original equipment manufacturer (OEM) business and the aftermarket business, which includes maintenance repair and overhaul services and the manufacture and delivery of aerospace aftermarket spare parts.

About Timken

The Timken Company engineers, manufactures and markets bearings, transmissions, gearboxes, belts, chain, couplings and related products and offers a spectrum of power system rebuild and repair services across the world. The Company operates through two segments: Mobile Industries and Process Industries. Its Mobile Industries segment offers a portfolio of bearings, seals, lubrication devices and systems, as well as power transmission components, engineered chain, augers, belts and related products and maintenance services to original equipment manufacturers (OEMs) and end users of off-highway equipment for the agricultural, construction, mining, outdoor power equipment and powersports markets; on-highway vehicles, including passenger cars, light trucks and medium- and heavy-duty trucks; rail cars, and locomotives. Its Process Industries segment supplies industrial bearings and assemblies, power transmission components, and related products and services to OEMs and end users.

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