Head to Head Survey: Olympic Steel (NASDAQ:ZEUS) & Friedman Industries (NASDAQ:FRD)

Friedman Industries (NASDAQ:FRD) and Olympic Steel (NASDAQ:ZEUS) are both small-cap materials companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Risk and Volatility

Friedman Industries has a beta of 1.65, suggesting that its stock price is 65% more volatile than the S&P 500. Comparatively, Olympic Steel has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Friedman Industries and Olympic Steel, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Friedman Industries	0	0	1	0	3.00
Olympic Steel	0	1	0	0	2.00

Dividends

Friedman Industries pays an annual dividend of $0.16 per share and has a dividend yield of 0.4%. Olympic Steel pays an annual dividend of $0.64 per share and has a dividend yield of 1.3%. Friedman Industries pays out 4.2% of its earnings in the form of a dividend. Olympic Steel pays out 54.7% 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. Friedman Industries has raised its dividend for 1 consecutive years and Olympic Steel has raised its dividend for 4 consecutive years. Olympic Steel is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

33.3% of Friedman Industries shares are owned by institutional investors. Comparatively, 87.1% of Olympic Steel shares are owned by institutional investors. 6.6% of Friedman Industries shares are owned by insiders. Comparatively, 13.8% of Olympic Steel shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Friedman Industries and Olympic Steel”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Friedman Industries	$752.11 million	0.41	$27.70 million	$3.84	11.16
Olympic Steel	$1.90 billion	0.28	$22.98 million	$1.17	40.91

Friedman Industries has higher earnings, but lower revenue than Olympic Steel. Friedman Industries is trading at a lower price-to-earnings ratio than Olympic Steel, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Friedman Industries and Olympic Steel’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Friedman Industries	N/A	N/A	N/A
Olympic Steel	0.73%	2.11%	1.14%

Summary

Olympic Steel beats Friedman Industries on 10 of the 16 factors compared between the two stocks.

About Friedman Industries

Friedman Industries, Incorporated engages in steel processing, pipe manufacturing and processing, and the steel and pipe distribution businesses the United States. It operates in two segments, Coil and Tubular. The Coil segment is involved in the conversion of steel coils into flat sheet and plate steel cut to customer specifications and reselling steel coils. This segment also processes customer-owned coils on a fee basis. The company sells coil products and processing services to approximately 200 customers located primarily in the midwestern, southwestern and southeastern regions of the United States. Its principal customers for these products and services are steel distributors and customers manufacturing steel products, such as steel buildings, railroad cars, barges, tanks and containers, trailers, component parts and other fabricated steel products. The Tubular segment manufactures line and oil country pipes, as well as pipes for structural applications. This segment sells its tubular products principally to steel and pipe distributors through its own sales force. The company was incorporated in 1965 and is headquartered in Longview, Texas.

About Olympic Steel

Olympic Steel, Inc. processes, distributes, and stores metal products primarily in the United States, Canada, and Mexico. It operates in three segments: Carbon Flat Products; Specialty Metals Flat Products; and Tubular and Pipe Products. The company offers stainless steel and aluminum coil and sheet products, angles, rounds, and flat bars; alloy, heat treated, and abrasion resistant coils, sheets and plates; coated metals, including galvanized, galvannealed, electro galvanized, advanced high strength steels, aluminized, and automotive grades of steel; commercial quality, advanced high strength steel, drawing steel, and automotive grades cold rolled steel coil and sheet products; hot rolled carbon comprising hot rolled coil, pickled and oiled sheet and plate steel products, automotive grades, advanced high strength steels, and high strength low alloys; tube, pipe, and bar products, including round, square, and rectangular mechanical and structural tubing; hydraulic and stainless tubing; boiler tubing; carbon, stainless, and aluminum pipes; valves and fittings; and tin mill products, such as electrolytic tinplate, electrolytic chromium coated steel, and black plates. The company also provides cutting-to-length, slitting, shearing, blanking, tempering, stretcher-leveling, plate and laser processing, forming and machining, tube processing, finishing, and fabrication services, as well as value-added services, such as saw cutting, laser cutting, beveling, threading, and grooving services. It serves metal consuming industries, such as manufacturers and fabricators of transportation and material handling lift equipment, construction, mining and farm equipment, agriculture equipment, storage tanks, environmental and energy generation equipment, automobiles, food service, and electrical equipment, as well as general and plate fabricators, and metals service centers through direct sales force. Olympic Steel, Inc. was founded in 1954 and is based in Highland Hills, Ohio.