Reviewing PACCAR (NASDAQ:PCAR) and Astec Industries (NASDAQ:ASTE)

Astec Industries (NASDAQ:ASTE) and PACCAR (NASDAQ:PCAR) are both industrials companies, but which is the better business? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.

Profitability

This table compares Astec Industries and PACCAR’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Astec Industries	1.26%	10.26%	5.01%
PACCAR	9.00%	12.73%	5.69%

Dividends

Astec Industries pays an annual dividend of $0.52 per share and has a dividend yield of 1.3%. PACCAR pays an annual dividend of $1.40 per share and has a dividend yield of 1.2%. Astec Industries pays out 61.2% of its earnings in the form of a dividend. PACCAR pays out 29.4% 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. PACCAR has increased its dividend for 5 consecutive years.

Insider and Institutional Ownership

93.2% of Astec Industries shares are held by institutional investors. Comparatively, 64.9% of PACCAR shares are held by institutional investors. 1.0% of Astec Industries shares are held by company insiders. Comparatively, 2.0% of PACCAR 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.

Volatility and Risk

Astec Industries has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500. Comparatively, PACCAR has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.

Earnings and Valuation

This table compares Astec Industries and PACCAR”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Astec Industries	$1.41 billion	0.67	$38.80 million	$0.85	48.13
PACCAR	$28.44 billion	2.19	$2.38 billion	$4.76	24.84

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Astec Industries and PACCAR, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Astec Industries	1	1	0	2	2.75
PACCAR	0	11	3	0	2.21

PACCAR has a consensus price target of $133.91, indicating a potential upside of 13.27%. Given PACCAR’s higher probable upside, analysts clearly believe PACCAR is more favorable than Astec Industries.

Summary

PACCAR beats Astec Industries on 12 of the 18 factors compared between the two stocks.

About Astec Industries

Astec Industries, Inc. designs, engineers, manufactures, and markets equipment and components used primarily in road building and related construction activities worldwide. The company operates in two segments, Infrastructure Solutions and Materials Solutions. The Infrastructure Solutions segment offers asphalt plants and related components, heaters, concrete dust control systems, asphalt pavers, vaporizers, concrete material handling systems, screeds, heat recovery units, paste back-fill plants, asphalt storage tanks, hot oil heaters, bagging plants, fuel storage tanks, industrial and asphalt burners and systems, custom batch plants, material transfer vehicles, soil stabilizing-reclaiming machinery, blower trucks and trailers, milling machines, soil remediation plants, wood chippers and grinders, pump trailers, concrete batch plants, control systems, liquid terminals, storage equipment and related parts, construction and retrofits, polymer plants, and concrete mixers, as well as engineering and environmental permitting services. This segment provides its products to asphalt producers; highway and heavy equipment contractors; utility contractors; sand and gravel producers; construction, demolition, recycle and crushing contractors; forestry and environmental recycling contractors; mine and quarry operators; port and inland terminal authorities; power stations; and domestic and foreign government agencies. The Materials Solutions segment designs and manufactures crushing equipment, mobile plants, bulk material handling solutions, vibrating equipment, screening equipment, electrical control centers, modular plants and systems, conveying equipment, plant automation products, portable plants, and mineral processing equipment, as well as offers consulting and engineering services. The company was incorporated in 1972 and is headquartered in Chattanooga, Tennessee.

About PACCAR

PACCAR Inc designs, manufactures, and distributes light, medium, and heavy-duty commercial trucks in the United States, Canada, Europe, Mexico, South America, Australia, and internationally. It operates through three segments: Truck, Parts, and Financial Services. The Truck segment designs, manufactures, and distributes trucks for the over-the-road and off-highway hauling of commercial and consumer goods. It sells its trucks through a network of independent dealers under the Kenworth, Peterbilt, and DAF nameplates. The Parts segment distributes aftermarket parts for trucks and related commercial vehicles. The Financial Services segment conducts full-service leasing operations under the PacLease trade name, as well as provides finance and leasing products and services to customers and dealers. This segment also offers equipment financing and administrative support services for its franchisees; retail loan and leasing services for small, medium, and large commercial trucking companies, as well as independent owners/operators and other businesses; and truck inventory financing services to independent dealers. In addition, this segment offers loans and leases directly to customers for the acquisition of trucks and related equipment. The company also manufactures and markets industrial winches under the Braden, Carco, and Gearmatic nameplates. PACCAR Inc was founded in 1905 and is headquartered in Bellevue, Washington.