Head to Head Analysis: Nucor (NYSE:NUE) vs. Salzgitter (OTCMKTS:SZGPY)

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nucor	$32.49 billion	1.82	$1.74 billion	$10.10	25.68
Salzgitter	$10.16 billion	0.38	-$83.95 million	$0.09	78.28

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Nucor	6.82%	10.68%	6.74%
Salzgitter	0.49%	1.02%	0.43%

Analyst Recommendations

This is a summary of recent ratings and target prices for Nucor and Salzgitter, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nucor	0	4	10	2	2.88
Salzgitter	0	3	4	0	2.57

Nucor presently has a consensus price target of $264.50, indicating a potential upside of 1.98%. Given Nucor’s stronger consensus rating and higher possible upside, analysts clearly believe Nucor is more favorable than Salzgitter.

Insider and Institutional Ownership

76.5% of Nucor shares are owned by institutional investors. 0.6% of Nucor 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.

Volatility and Risk

Nucor has a beta of 1.88, meaning that its stock price is 88% more volatile than the S&P 500. Comparatively, Salzgitter has a beta of 1.65, meaning that its stock price is 65% more volatile than the S&P 500.

Dividends

Nucor pays an annual dividend of $2.24 per share and has a dividend yield of 0.9%. Salzgitter pays an annual dividend of $0.01 per share and has a dividend yield of 0.1%. Nucor pays out 22.2% of its earnings in the form of a dividend. Salzgitter pays out 11.1% 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. Nucor has raised its dividend for 52 consecutive years. Nucor is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Nucor beats Salzgitter on 16 of the 18 factors compared between the two stocks.

About Nucor

Nucor Corporation engages in manufacture and sale of steel and steel products. It operates in three segments: steel mills, steel products, and raw materials. The Steel Mills segment produces hot-rolled, cold-rolled, and galvanized sheet steel products; plate steel products; wide-flange beams, beam blanks, and H-piling and sheet piling structural steel products; bar steel products, such as blooms, billets, concrete reinforcing and merchant bars, and engineered special bar quality products; and engages in the steel trading and rebar distribution businesses. This segment sells its products to steel service centers, fabricators, and manufacturers in the United States, Canada, and Mexico. The Steel Products segment offers steel joists and joist girders, steel decks, and galvanized torque tubes for used in solar arrays, hollow structural section steel tubing, electrical conduit, fabricated concrete reinforcing steel, cold finished steel, steel fasteners, steel grating and expanded metal, wire and wire mesh, metal building systems, insulated metal panels, steel racking, overhead doors, and utility towers and structures for communications and energy transmission. This segment is also involved in the piling distribution business. The Raw Materials segment produces direct reduced iron (DRI); brokers ferrous and nonferrous metals, pig iron, hot briquetted iron, and DRI; supplies ferro-alloys; processes ferrous and nonferrous scrap metal; and engages in the natural gas production and industrial gas business. This segment sells its ferrous scrap to electric arc furnace steel mills and foundries for manufacturing process; and nonferrous scrap metal to aluminum can producers, secondary aluminum smelters, steel mills and other processors, and consumers of various nonferrous metals. It markets its products through in-house sales force; and internal distribution and trading companies. Nucor Corporation was founded in 1905 and is headquartered in Charlotte, North Carolina.

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.