Critical Survey: POSCO (NYSE:PKX) versus Salzgitter (OTCMKTS:SZGPY)

POSCO (NYSE:PKX) and Salzgitter (OTCMKTS:SZGPY) are both basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.

Risk & Volatility

POSCO has a beta of 1.58, suggesting that its share price is 58% more volatile than the S&P 500. Comparatively, Salzgitter has a beta of 1.56, suggesting that its share price is 56% more volatile than the S&P 500.

Profitability

This table compares POSCO and Salzgitter’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
POSCO	1.19%	1.35%	0.81%
Salzgitter	0.49%	1.02%	0.43%

Earnings and Valuation

This table compares POSCO and Salzgitter”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
POSCO	$48.64 billion	0.46	$483.48 million	$1.69	44.11
Salzgitter	$10.16 billion	0.34	-$83.95 million	$0.09	70.89

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

Dividends

POSCO pays an annual dividend of $1.31 per share and has a dividend yield of 1.8%. Salzgitter pays an annual dividend of $0.01 per share and has a dividend yield of 0.2%. POSCO pays out 77.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Salzgitter pays out 11.1% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings for POSCO and Salzgitter, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
POSCO	1	1	2	0	2.25
Salzgitter	1	4	3	0	2.25

Summary

POSCO beats Salzgitter on 9 of the 12 factors compared between the two stocks.

About POSCO

POSCO Holdings Inc., together with its subsidiaries, operates as an integrated steel producer in Korea and internationally. It operates through six segments: Steel, Trading, Construction, Logistics and Others, Green Materials and Energy, and Others. The company engages in the production, import, sale, and export of steel products, such as hot and cold rolled steel, stainless steel, plates, wire rods, and silicon steel sheets, as well as pig iron, billets, blooms, and slabs; trading of steel and raw materials, textiles, agricultural commodities, and other goods; natural resources development and power generation activities; and planning, designing, and construction of industrial plants, civil engineering projects, and commercial and residential buildings. It is also involved in the manufacture and sale of various energy-related and other industrial materials, including anode and cathode materials for rechargeable batteries; investment business; and provision of alternative environmentally-friendly energy solutions, as well as information technology and operational technology, and integrated logistics services. POSCO Holdings Inc. was incorporated in 1968 and is based in Seoul, South Korea.

About Salzgitter

Salzgitter AG, together with its subsidiaries, engages in steel and technology businesses worldwide. It operates through four segments: Steel Production, Steel Processing, Trading, and Technology. The Steel Production segment manufactures steel and special steels, such as hot-rolled wide strip, steel sheet, sections, tailored blanks, as well as scrap trading. The Steel Processing segment produces various high-grade heavy plates; and manufactures line pipes, HFI-welded tubes, and precision and stainless-steel tubes. The Trading segment operates a European sales network, as well as trading companies and agencies worldwide. The Technology segment engages in the provision of machinery and plants for the filling and packaging of beverages, as well as special machinery engineering for shoe manufacturing and elastomer production. The company also provides IT, facility management, logistics, automotive engineering, and research and development services, as well as supplies raw materials. The company was founded in 1858 and is headquartered in Salzgitter, Germany.