Reviewing Kone Oyj (OTCMKTS:KNYJY) & A. O. Smith (NYSE:AOS)

Kone Oyj (OTCMKTS:KNYJY) and A. O. Smith (NYSE:AOS) are both industrials companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, valuation, profitability, dividends and risk.

Analyst Ratings

This is a summary of current ratings for Kone Oyj and A. O. Smith, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kone Oyj	1	1	0	0	1.50
A. O. Smith	0	5	2	0	2.29

A. O. Smith has a consensus price target of $75.29, suggesting a potential upside of 10.71%. Given A. O. Smith’s stronger consensus rating and higher possible upside, analysts plainly believe A. O. Smith is more favorable than Kone Oyj.

Valuation and Earnings

This table compares Kone Oyj and A. O. Smith”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kone Oyj	$12.01 billion	2.42	$1.03 billion	$1.00	32.12
A. O. Smith	$3.82 billion	2.53	$533.60 million	$3.58	18.99

Kone Oyj has higher revenue and earnings than A. O. Smith. A. O. Smith is trading at a lower price-to-earnings ratio than Kone Oyj, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Kone Oyj has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, A. O. Smith has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Dividends

Kone Oyj pays an annual dividend of $0.42 per share and has a dividend yield of 1.3%. A. O. Smith pays an annual dividend of $1.36 per share and has a dividend yield of 2.0%. Kone Oyj pays out 42.0% of its earnings in the form of a dividend. A. O. Smith pays out 38.0% 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. A. O. Smith has raised its dividend for 31 consecutive years. A. O. Smith is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

76.1% of A. O. Smith shares are held by institutional investors. 0.8% of A. O. Smith shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Kone Oyj and A. O. Smith’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kone Oyj	8.58%	36.24%	10.82%
A. O. Smith	13.74%	28.39%	16.70%

Summary

A. O. Smith beats Kone Oyj on 13 of the 17 factors compared between the two stocks.

About Kone Oyj

KONE Oyj, together with its subsidiaries, engages in the elevator and escalator business worldwide. The company provides elevators, escalators, and automatic building doors. It offers maintenance services; and modernization solutions. In addition, the company offers KONE Office Flow, a connected solution that allows for personalized user experiences and touch-free access; health and well-being solutions for elevators, escalators, and doors; KONE Access, an access control system, which is integrated with elevator system and building doors; KONE Destination, a destination control system that reduce waiting and travel times; KONE infotainment, a communication channel for building tenants and visitors; and monitoring solutions that enable real-time inspection of elevators and escalators. Further, it provides people flow planning and consulting services; solutions for special buildings and large projects; cybersecurity solutions; and energy solutions for greener buildings. KONE Oyj was founded in 1908 and is based in Espoo, Finland.

About A. O. Smith

A. O. Smith Corporation manufactures and markets residential and commercial gas and electric water heaters, boilers, heat pumps, tanks, and water treatment products in North America, China, Europe, and India. The company offers water heaters for residences, restaurants, hotels, office buildings, laundries, car washes, and small businesses; boilers for hospitals, schools, hotels, and other large commercial buildings, as well as homes, apartments, and condominiums; and water treatment products comprising point-of-entry water softeners, well water solutions, and whole-home water filtration products, and point-of-use carbon and reverse osmosis products for residences, restaurants, hotels, and offices. It also provides commercial water treatment and filtration product; expansion tanks, commercial solar water heating systems, swimming pool and spa heaters, and related products and parts; and electric wall-hung, gas tankless, combi-boiler, and heat pump and solar water heaters. The company offers its products under the A. O. Smith, State, Lochinvar, Hague, Water-Right, Master Water, Atlantic Filter, and Water Tec brands. It distributes its products through independent wholesale plumbing distributors, as well as to retail channels consisting of hardware and home center chains, and manufacturer representative firms; and offers Aquasana branded products directly to consumers through e-commerce channels. A. O. Smith Corporation was founded in 1874 and is headquartered in Milwaukee, Wisconsin.