Head-To-Head Analysis: Vallourec (OTCMKTS:VLOUF) vs. Commercial Metals (NYSE:CMC)

Commercial Metals (NYSE:CMC) and Vallourec (OTCMKTS:VLOUF) are both basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, valuation, risk, earnings and profitability.

Profitability

This table compares Commercial Metals and Vallourec’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Commercial Metals	9.77%	22.62%	13.54%
Vallourec	N/A	N/A	N/A

Earnings & Valuation

This table compares Commercial Metals and Vallourec’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Commercial Metals	$8.80 billion	0.61	$859.76 million	$7.25	6.29
Vallourec	N/A	N/A	N/A	$2.00	5.81

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

Dividends

Commercial Metals pays an annual dividend of $0.64 per share and has a dividend yield of 1.4%. Vallourec pays an annual dividend of $0.81 per share and has a dividend yield of 7.0%. Commercial Metals pays out 8.8% of its earnings in the form of a dividend. Vallourec pays out 40.5% 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. Commercial Metals has increased its dividend for 2 consecutive years.

Analyst Ratings

This is a summary of current ratings and recommmendations for Commercial Metals and Vallourec, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Commercial Metals	0	3	3	0	2.50
Vallourec	0	0	0	0	N/A

Commercial Metals presently has a consensus target price of $55.17, indicating a potential upside of 21.01%. Given Commercial Metals’ higher possible upside, equities research analysts clearly believe Commercial Metals is more favorable than Vallourec.

Institutional and Insider Ownership

82.6% of Commercial Metals shares are owned by institutional investors. Comparatively, 29.0% of Vallourec shares are owned by institutional investors. 1.2% of Commercial Metals shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Commercial Metals beats Vallourec on 12 of the 13 factors compared between the two stocks.

About Commercial Metals

Commercial Metals Company manufactures, recycles, and fabricates steel and metal products, and related materials and services in the United States, Poland, China, and internationally. It operates through two segments, North America and Europe. The company processes and sells ferrous and nonferrous scrap metals to steel mills and foundries, aluminum sheet and ingot manufacturers, brass and bronze ingot makers, copper refineries and mills, secondary lead smelters, specialty steel mills, high temperature alloy manufacturers, and other consumers. It also manufactures and sells finished long steel products, including reinforcing bar, merchant bar, light structural, and other special sections, as well as semi-finished billets for rerolling and forging applications. In addition, the company provides fabricated rebar used to reinforce concrete primarily in the construction of commercial and non-commercial buildings, hospitals, convention centers, industrial plants, power plants, highways, bridges, arenas, stadiums, and dams; sells and rents construction-related products and equipment to concrete installers and other businesses; and manufactures and sells strength bars for the truck trailer industry, special bar steels for the energy market, and armor plates for military vehicles. Further, it manufactures rebars, merchant bars, and wire rods; and sells fabricated rebars, wire meshes, fabricated meshes, assembled rebar cages, and other fabricated rebar by-products to fabricators, manufacturers, distributors, and construction companies. The company was founded in 1915 and is headquartered in Irving, Texas.

About Vallourec

Vallourec S.A., through its subsidiaries, provides tubular solutions for the oil and gas, industry, and energy markets in Europe, North America, South America, Asia, the Middle East, and internationally. It operates through Tubes, Mine & Forests, and Holding Companies & Other segments. The company offers seamless tubes for refineries, petrochemical facilities, and floating liquefied natural gas plants, as well as production, storage, and offloading units; casings; tubings; VAM connections; rigid subsea line pipes, onshore rigid line pipes, and specialized tubes for transportation of oil and gas; and carbon steel and steel alloy tubes, hollow bars, and connections for the processing of industrial fluids, and oil and gas. Its oil and gas market services include assistance in lowering tubes, inspecting connections, and supervising assembly; repair services for its products and thread tubes inventory management; tube inspection, maintenance, and repair services; on-site services; preparation for drilling operations; well coordination and supply services based on the drilling programs; integrated solutions for the subsea line pipe market comprising welding, coating, insulation, logistics, and service agreements; and tube coating and welding services. The company's power generation market products and services comprise seamless tubes for steam generators. Its industrial market products and services include tubes and hollow bars, as well as circular, square, rectangular, and octagonal sections; tubular solutions for infrastructure construction; tubes and rings to manufacture cranes, construction machinery, agricultural machinery, and hydraulic cylinders; and tubes and axles for automotive manufacturers. The company is also involved in the iron ore production business. Vallourec S.A. was founded in 1899 and is based in Meudon, France.