Critical Review: IDEX (NYSE:IEX) vs. CNH Industrial (NYSE:CNH)

IDEX (NYSE:IEX) and CNH Industrial (NYSE:CNH) are both large-cap industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Profitability

This table compares IDEX and CNH Industrial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
IDEX	14.49%	15.69%	9.10%
CNH Industrial	1.71%	6.78%	1.24%

Risk & Volatility

IDEX has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500. Comparatively, CNH Industrial has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Insider & Institutional Ownership

98.0% of IDEX shares are owned by institutional investors. Comparatively, 59.9% of CNH Industrial shares are owned by institutional investors. 0.5% of IDEX shares are owned by company insiders. Comparatively, 0.2% of CNH Industrial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for IDEX and CNH Industrial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
IDEX	0	3	9	0	2.75
CNH Industrial	1	6	8	0	2.47

IDEX presently has a consensus price target of $260.73, suggesting a potential upside of 10.90%. CNH Industrial has a consensus price target of $13.30, suggesting a potential upside of 14.61%. Given CNH Industrial’s higher possible upside, analysts plainly believe CNH Industrial is more favorable than IDEX.

Valuation and Earnings

This table compares IDEX and CNH Industrial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
IDEX	$3.46 billion	5.01	$483.20 million	$6.95	33.83
CNH Industrial	$18.09 billion	0.79	$510.00 million	$0.25	46.42

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

Dividends

IDEX pays an annual dividend of $2.92 per share and has a dividend yield of 1.2%. CNH Industrial pays an annual dividend of $0.10 per share and has a dividend yield of 0.9%. IDEX pays out 42.0% of its earnings in the form of a dividend. CNH Industrial pays out 40.0% 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. IDEX has increased its dividend for 16 consecutive years. IDEX is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

IDEX beats CNH Industrial on 11 of the 17 factors compared between the two stocks.

About IDEX

IDEX Corporation, together with its subsidiaries, provides applied solutions worldwide. The company operates through three segments: Fluid & Metering Technologies (FMT), Health & Science Technologies (HST), and Fire & Safety/Diversified Products (FSDP). The FMT segment designs, produces, and distributes positive displacement pumps, valves, small volume provers, flow meters, injectors, and other fluid-handling pump modules and systems, as well as flow monitoring and other services for the food, chemical, general industrial, water and wastewater, agricultural, and energy industries. The HST segment designs, produces, and distributes precision fluidics positive displacement pumps, powder and liquid processing technologies, drying systems, micro-precision components, pneumatic components and sealing solutions, high performance molded and extruded sealing components, custom mechanical and shaft seals, engineered hygienic mixers and valves, biocompatible medical devices and implantables, air compressors and blowers, optical components and coatings, laboratory and commercial equipment, and precision photonic solutions. This segment serves food and beverage, life sciences, analytical instruments, pharmaceutical and biopharmaceutical, industrial, semiconductor, automotive/transportation, medical/dental, energy, cosmetics, marine, chemical, wastewater and water treatment, research and aerospace/defense markets. The FSDP segment designs, produces, and distributes firefighting pumps, valves and controls, rescue tools, lifting bags, and other components and systems for the fire and rescue industry; engineered stainless steel banding and clamping devices for various industrial and commercial applications; and precision equipment for dispensing, metering, and mixing colorants and paints used in retail and commercial businesses. IDEX Corporation was incorporated in 1987 and is headquartered in Northbrook, Illinois.

About CNH Industrial

CNH Industrial NV is an equipment and services company, which develops, manufactures and sells specialized machines and services for the farming and construction industries, and supplies replacement parts and accessories. It operates through the following operating segments: Agriculture, Construction, and Financial Services. The Agriculture segment designs, manufactures, and distributes a full line of farm machinery and implements, including two-wheel and four-wheel drive tractors, crawler tractors, combines, grape and sugar cane harvesters, hay and forage equipment, planting and seeding equipment, soil preparation and cultivation implements and material handling equipment. The Construction segment comprises of a full line of construction equipment including excavators, crawler dozers, graders, wheel loaders, backhoe loaders, skid steer loaders, and compact track loaders. The Financial Services segment offers retail note and lease financing to end-use customers for the purchase of new and used agricultural and construction equipment and components. The company was founded in 1866 and is headquartered in London, the United Kingdom.