Contrasting KLX (KLXI) & W W Grainger (GWW)

KLX (NASDAQ: KLXI) and W W Grainger (NYSE:GWW) are both aerospace companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, valuation, analyst recommendations, earnings, risk and institutional ownership.

Volatility and Risk

KLX has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500. Comparatively, W W Grainger has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Dividends

W W Grainger pays an annual dividend of $5.12 per share and has a dividend yield of 2.0%. KLX does not pay a dividend. W W Grainger pays out 44.7% of its earnings in the form of a dividend. W W Grainger has raised its dividend for 46 consecutive years.

Profitability

This table compares KLX and W W Grainger’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KLX 4.99% 5.14% 3.08%
W W Grainger 5.62% 35.76% 11.51%

Valuation and Earnings

This table compares KLX and W W Grainger’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
KLX $1.53 billion 2.20 $48.20 million $1.63 41.02
W W Grainger $10.42 billion 1.40 $585.73 million $11.46 22.60

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

Insider and Institutional Ownership

85.9% of W W Grainger shares are owned by institutional investors. 1.8% of KLX shares are owned by company insiders. Comparatively, 9.6% of W W Grainger shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for KLX and W W Grainger, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KLX 0 3 2 0 2.40
W W Grainger 4 10 2 0 1.88

KLX presently has a consensus target price of $65.00, suggesting a potential downside of 2.78%. W W Grainger has a consensus target price of $228.45, suggesting a potential downside of 11.80%. Given KLX’s stronger consensus rating and higher probable upside, equities analysts plainly believe KLX is more favorable than W W Grainger.

Summary

W W Grainger beats KLX on 10 of the 16 factors compared between the two stocks.

KLX Company Profile

KLX Inc. (KLX) is the distributor and service provider of aerospace fasteners and consumables. The Company offers ranges of aerospace hardware and consumables and inventory management services across the world. The Company operates through two segments: Aerospace Solutions Group (ASG) and Energy Services Group (ESG). The Company’s ASG segment service offerings include inventory management and replenishment, creative and differential supply chain solutions, such as third-party logistics programs, special packaging and bar-coding, parts kitting, quality assurance testing and a range of purchasing assistance programs, plus the electronic data interchange capability. The Company’s ESG segment products and services include onshore completion services, wireline services, fishing services and tools, down-hole completion and production services, pressure control, accommodations and related surface rental equipment, and remanufacturing shops.

W W Grainger Company Profile

W.W. Grainger, Inc. (Grainger) is a distributor of maintenance, repair and operating (MRO) supplies and other related products and services. The Company offers its products and services to businesses and institutions in the United States and Canada, with presence also in Europe, Asia and Latin America. The Company operates through two segments, which include the United States and Canada. The Company’s business support functions provide coordination and guidance in the areas of accounting and finance, business development, communications and investor relations, compensation and benefits, information systems, health and safety, global supply chain functions, human resources, risk management, internal audit, legal, real estate, security, tax and treasury. The Company’s other businesses also include Zoro Tools, Inc. (Zoro), the single channel online business in the United States, MonotaRO Co. (MonotaRO) in Japan, and operations in Europe, Asia and Latin America.

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