Rockwell Automation (NYSE: ROK) and NL Industries (NYSE:NL) are both industrial products companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

73.0% of Rockwell Automation shares are held by institutional investors. Comparatively, 9.3% of NL Industries shares are held by institutional investors. 1.7% of Rockwell Automation shares are held by insiders. Comparatively, 0.1% of NL Industries shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for Rockwell Automation and NL Industries, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rockwell Automation 1 11 3 0 2.13
NL Industries 1 0 0 0 1.00

Rockwell Automation presently has a consensus target price of $165.58, suggesting a potential downside of 13.52%. NL Industries has a consensus target price of $14.00, suggesting a potential upside of 8.11%. Given NL Industries’ higher possible upside, analysts clearly believe NL Industries is more favorable than Rockwell Automation.

Dividends

Rockwell Automation pays an annual dividend of $3.34 per share and has a dividend yield of 1.7%. NL Industries does not pay a dividend. Rockwell Automation pays out 52.7% of its earnings in the form of a dividend. NL Industries has raised its dividend for 7 consecutive years.

Earnings & Valuation

This table compares Rockwell Automation and NL Industries’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Rockwell Automation $6.31 billion 3.90 $825.70 million $6.34 30.20
NL Industries $108.90 million 5.79 $15.32 million $1.58 8.20

Rockwell Automation has higher revenue and earnings than NL Industries. NL Industries is trading at a lower price-to-earnings ratio than Rockwell Automation, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Rockwell Automation has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500. Comparatively, NL Industries has a beta of 2.86, meaning that its share price is 186% more volatile than the S&P 500.

Profitability

This table compares Rockwell Automation and NL Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rockwell Automation 13.08% 38.67% 12.32%
NL Industries 67.61% 33.69% 17.82%

Summary

Rockwell Automation beats NL Industries on 10 of the 17 factors compared between the two stocks.

About Rockwell Automation

Rockwell Automation, Inc. (Rockwell Automation) is a provider of industrial automation power, control and information solutions for manufacturers. The Company operates through two segments: Architecture & Software and Control Products & Solutions. The Architecture & Software segment contains various hardware, software and communication components of the Company’s integrated control and information architecture capable of controlling the customer’s industrial processes and connecting with their manufacturing enterprise. Architecture & Software has a portfolio of products, including Control platforms that perform multiple control disciplines and monitoring of applications, including discrete, batch and continuous process, drives control, motion control and machine safety control. The Control Products & Solutions segment portfolio includes low and medium voltage electro-mechanical and electronic motor starters, signaling devices, termination and protection devices, relays and timers.

About NL Industries

NL Industries, Inc. is a holding company. The Company operates in the component products industry through its subsidiary, CompX International Inc. (CompX). The Company operates in the chemicals industry through its non-controlling interest in Kronos Worldwide, Inc. (Kronos). The Company, through Compx, manufactures engineered components that are sold to a range of industries, including recreational transportation (including boats), postal, office and institutional furniture, cabinetry, tool storage, healthcare, gas stations and vending equipment. Kronos is a global producer and marketer of value-added titanium dioxide pigments (TiO2), a base industrial product used in imparting whiteness, brightness and opacity to a range of customer applications and end use markets, including coatings, plastics, paper, inks, food, cosmetics, and other industrial and consumer products. Kronos has production facilities in Europe and North America.

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