Encore Wire (NASDAQ: WIRE) and LSC Communications (NYSE:LKSD) are both small-cap industrial products companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, valuation, analyst recommendations, profitability and risk.
Valuation and Earnings
This table compares Encore Wire and LSC Communications’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Encore Wire||$1.16 billion||1.00||$67.01 million||$3.20||17.53|
|LSC Communications||$3.60 billion||0.17||-$57.00 million||($1.65)||-10.73|
Encore Wire has higher earnings, but lower revenue than LSC Communications. LSC Communications is trading at a lower price-to-earnings ratio than Encore Wire, indicating that it is currently the more affordable of the two stocks.
This table compares Encore Wire and LSC Communications’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of recent ratings and recommmendations for Encore Wire and LSC Communications, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Encore Wire presently has a consensus target price of $56.00, suggesting a potential downside of 0.18%. LSC Communications has a consensus target price of $24.00, suggesting a potential upside of 35.52%. Given LSC Communications’ higher possible upside, analysts clearly believe LSC Communications is more favorable than Encore Wire.
Volatility and Risk
Encore Wire has a beta of 2.12, indicating that its share price is 112% more volatile than the S&P 500. Comparatively, LSC Communications has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500.
Insider and Institutional Ownership
88.9% of Encore Wire shares are held by institutional investors. Comparatively, 87.3% of LSC Communications shares are held by institutional investors. 3.8% of Encore Wire shares are held by insiders. Comparatively, 2.5% of LSC Communications shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Encore Wire pays an annual dividend of $0.08 per share and has a dividend yield of 0.1%. LSC Communications pays an annual dividend of $1.04 per share and has a dividend yield of 5.9%. Encore Wire pays out 2.5% of its earnings in the form of a dividend. LSC Communications pays out -63.0% 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. LSC Communications is clearly the better dividend stock, given its higher yield and lower payout ratio.
Encore Wire beats LSC Communications on 11 of the 16 factors compared between the two stocks.
Encore Wire Company Profile
Encore Wire Corporation is a manufacturer of electrical building wire and cable. The Company is a supplier of building wire for interior electrical wiring in commercial and industrial buildings, homes, apartments, and manufactured housing. The Company manufactures electric building wire, principally NM-B cable, for use primarily as interior wiring in homes, apartments and manufactured housing, and THHN/THWN-2 cable and metal-clad and armored cable for use primarily as wiring in commercial and industrial buildings. It offers an electrical building wire product line that consists primarily of UF-B cable and other types of wire products, including metal-clad and armored cable. All of these products are manufactured with copper or aluminum as the conductor. NM-B cable consists of either two or three insulated copper wire conductors, with an uninsulated ground wire, all sheathed in a polyvinyl chloride (PVC) jacket.
LSC Communications Company Profile
LSC Communications, Inc. focuses on traditional and digital print, print-related services and office products. The Company’s segments are Print and Office Products. The Company, through its Print segment, provides a range of print product offerings, which include magazines, catalogs, retail inserts, books and directories. In addition to printed products, the Company also provides a number of print-related services, such as supply chain management, mail services, e-book formatting and distribution services. Its Print segment services over 3,000 customers, including publishers of magazines, books and directories, online retailers, catalogers, mass merchandisers and contract stationers. In its Office Products segment, the Company manufactures and sells a range of branded and private label products, primarily within the core categories, including filing products; note-taking products; binder products; tax and stock forms, and envelopes.
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