Synalloy (SYNL) & Nucor (NUE) Critical Analysis

Synalloy (NASDAQ: SYNL) and Nucor (NYSE:NUE) are both industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Institutional and Insider Ownership

48.2% of Synalloy shares are owned by institutional investors. Comparatively, 74.6% of Nucor shares are owned by institutional investors. 10.6% of Synalloy shares are owned by company insiders. Comparatively, 0.7% of Nucor shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Synalloy pays an annual dividend of $0.13 per share and has a dividend yield of 1.0%. Nucor pays an annual dividend of $1.51 per share and has a dividend yield of 2.6%. Synalloy pays out -100.0% of its earnings in the form of a dividend. Nucor pays out 43.9% 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 increased its dividend for 43 consecutive years. Nucor is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Synalloy has a beta of 0.14, meaning that its share price is 86% less volatile than the S&P 500. Comparatively, Nucor has a beta of 1.58, meaning that its share price is 58% more volatile than the S&P 500.

Valuation & Earnings

This table compares Synalloy and Nucor’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Synalloy $138.57 million 0.78 -$7.09 million ($0.13) -95.38
Nucor $16.21 billion 1.14 $796.27 million $3.44 16.84

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

Profitability

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

Net Margins Return on Equity Return on Assets
Synalloy -0.59% 1.85% 1.03%
Nucor 5.80% 12.78% 6.87%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Synalloy and Nucor, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Synalloy 0 0 0 0 N/A
Nucor 0 6 9 0 2.60

Nucor has a consensus price target of $67.44, indicating a potential upside of 16.39%. Given Nucor’s higher possible upside, analysts clearly believe Nucor is more favorable than Synalloy.

Summary

Nucor beats Synalloy on 13 of the 16 factors compared between the two stocks.

Synalloy Company Profile

Synalloy Corporation is a chemical manufacturing company. The Company operates through two segments: the Metals Segment and the Specialty Chemicals Segment. The Company’s Metals Segment comprises three subsidiaries: Synalloy Metals, Inc., which owns Bristol Metals, LLC (BRISMET), located in Bristol, Tennessee; Palmer of Texas Tanks, Inc. (Palmer), located in Andrews, Texas; and Specialty Pipe & Tube, Inc. (Specialty), located in Mineral Ridge, Ohio and Houston, Texas. The Company’s Metals Segment manufactures stainless steel, other alloy pipe, storage solutions and separation equipment. The Company’s Specialty Chemicals segment consists of the Company’s subsidiary, Manufacturers Soap and Chemical Company (MS&C). The Specialty Chemicals Segment manufactures lubricants, surfactants, reaction intermediaries, sulfated fats and oils, and chemical tolling manufacturing resources.

Nucor Company Profile

Nucor Corporation (Nucor) manufactures steel and steel products. The Company produces direct reduced iron (DRI) for use in its steel mills. It operates in three segments: steel mills, steel products and raw materials. The steel mills segment produces and distributes sheet steel (hot-rolled, cold-rolled and galvanized), plate steel, structural steel (wide-flange beams, beam blanks, H-piling and sheet piling) and bar steel (blooms, billets, concrete reinforcing bar, merchant bar, wire rod and special bar quality). The steel products segment produces steel joists and joist girders, steel deck, fabricated concrete reinforcing steel and cold finished steel. The raw materials produces DRI; brokers ferrous and nonferrous metals, pig iron, HBI and DRI; supplies ferro-alloys, and processes ferrous and nonferrous scrap metal. It also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron (HBI) and DRI.

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