Graco (NYSE:GGG) & IHI (OTCMKTS:IHICY) Head-To-Head Analysis

Graco (NYSE:GGG) and IHI (OTCMKTS:IHICY) are both large-cap industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Volatility and Risk

Graco has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500. Comparatively, IHI has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500.

Institutional and Insider Ownership

93.9% of Graco shares are held by institutional investors. 2.2% of Graco shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Graco and IHI, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Graco	0	4	3	0	2.43
IHI	0	2	0	0	2.00

Graco currently has a consensus target price of $94.25, indicating a potential upside of 26.79%. Given Graco’s stronger consensus rating and higher possible upside, equities analysts clearly believe Graco is more favorable than IHI.

Profitability

This table compares Graco and IHI’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Graco	22.96%	18.66%	15.22%
IHI	N/A	N/A	N/A

Valuation & Earnings

This table compares Graco and IHI”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Graco	$2.24 billion	5.52	$521.84 million	$3.07	24.21
IHI	$10.92 billion	1.59	$1.07 billion	$0.93	17.19

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

Dividends

Graco pays an annual dividend of $1.18 per share and has a dividend yield of 1.6%. IHI pays an annual dividend of $0.03 per share and has a dividend yield of 0.2%. Graco pays out 38.4% of its earnings in the form of a dividend. IHI pays out 3.2% 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. Graco has raised its dividend for 29 consecutive years. Graco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Graco beats IHI on 14 of the 17 factors compared between the two stocks.

About Graco

Graco Inc. designs, manufactures, and markets systems and equipment used to move, measure, control, dispense, and spray fluid and powder materials worldwide. The Contractor segment offers sprayers to apply paint to walls and other structures; two-component proportioning systems that are used to spray polyurethane foam and polyurea coatings; and viscous coatings to roofs, as well as markings on roads, parking lots, athletic fields, and floors. The Industrial segment provides liquid finishing equipment, paint circulating and supply pumps, paint circulating advanced control systems, plural component coating proportioners, and accessories and spare parts; equipment that pumps, meters, mixes and dispenses sealant, adhesive, and composite materials; and gel-coat equipment, chop and wet-out systems, resin transfer molding systems and applicators, and precision dispensing solutions. It also offers powder finishing products to coat powder finishing on metals under the Gema and SAT brands. The Process segment provides pumps to move and dispense chemicals, water, wastewater, petroleum, food, lubricants, and other fluids; pressure valves used in the oil and natural gas industry, other industrial processes, and research facilities; and chemical injection pumping solutions for injection of chemicals into producing oil wells and pipelines. It also supplies pumps, hose reels, meters, valves, and accessories for fast oil change facilities, service garages, fleet service centers, automobile dealerships, auto parts stores, truck builders, and heavy equipment service centers; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators in industrial and commercial equipment, compressors, turbines, and on- and off-road vehicles. It sells its products through distributors, original equipment manufacturers, and home center channels, as well as to end-users. The company was incorporated in 1926 and is headquartered in Minneapolis, Minnesota.

About IHI

IHI Corporation designs and builds engineering solutions in Japan and internationally. The company operates through four segments: Resources, Energy and Environment; Social Infrastructure; Industrial Systems and General-Purpose Machinery; and Aero Engine, Space and Defense. The company engages in the manufacturing, sale, and provision of services related to power systems plants for land use and power systems for chips; carbon solutions comprising boilers and storage facilities; components for nuclear power plants; bridges and water gates, transport systems, shield systems, and concrete construction materials; vehicular turbochargers, parking, heat treatment and surface engineering; transport machineries; logistics and industrial systems; and rotating machineries comprising compressors, separation systems, and turbochargers for ships. It also offers 3D laser radars, X-ray inspection systems, monitoring equipment, oil leak monitors, vibration control systems and seismic isolation floor systems, and disaster prevention equipment; environmental monitoring; cryogenic products, material handling systems, steelmaking equipment, pulp and paper machinery, agricultural machinery, life associated equipment; aero engines; rocket, space utilization, defense, and traffic control systems; and communication, electronic, electric measuring, information processing machines, and other instruments and equipment. In addition, the company sells and rents real estate. The company was formerly known as Ishikawajima-Harima Heavy Industries Co., Ltd and changed its name to IHI Corporation in 2007. IHI Corporation was founded in 1853 and is headquartered in Tokyo, Japan.