Head to Head Contrast: Illinois Tool Works (NYSE:ITW) vs. Japan Steel Works (OTCMKTS:JPSWY)

Illinois Tool Works (NYSE:ITW) and Japan Steel Works (OTCMKTS:JPSWY) are both industrials companies, but which is the better business? We will compare the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Insider & Institutional Ownership

79.8% of Illinois Tool Works shares are held by institutional investors. 0.9% of Illinois Tool Works shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Illinois Tool Works and Japan Steel Works’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Illinois Tool Works	21.31%	90.89%	19.17%
Japan Steel Works	7.21%	9.70%	4.79%

Dividends

Illinois Tool Works pays an annual dividend of $6.00 per share and has a dividend yield of 2.3%. Japan Steel Works pays an annual dividend of $0.22 per share and has a dividend yield of 0.7%. Illinois Tool Works pays out 52.8% of its earnings in the form of a dividend. Japan Steel Works pays out 27.5% 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. Illinois Tool Works has raised its dividend for 55 consecutive years. Illinois Tool Works is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Illinois Tool Works and Japan Steel Works, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Illinois Tool Works	3	8	1	0	1.83
Japan Steel Works	0	0	0	0	0.00

Illinois Tool Works currently has a consensus target price of $259.08, suggesting a potential upside of 1.29%. Given Illinois Tool Works’ stronger consensus rating and higher probable upside, research analysts plainly believe Illinois Tool Works is more favorable than Japan Steel Works.

Volatility and Risk

Illinois Tool Works has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, Japan Steel Works has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500.

Valuation & Earnings

This table compares Illinois Tool Works and Japan Steel Works”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Illinois Tool Works	$15.90 billion	4.71	$3.49 billion	$11.37	22.50
Japan Steel Works	$1.63 billion	2.91	$118.54 million	$0.80	39.84

Illinois Tool Works has higher revenue and earnings than Japan Steel Works. Illinois Tool Works is trading at a lower price-to-earnings ratio than Japan Steel Works, indicating that it is currently the more affordable of the two stocks.

Summary

Illinois Tool Works beats Japan Steel Works on 15 of the 17 factors compared between the two stocks.

About Illinois Tool Works

Illinois Tool Works Inc. manufactures and sells industrial products and equipment in the United States and internationally. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses. The Food Equipment segment provides warewashing, refrigeration, cooking, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services. The Test & Measurement and Electronics segment produces and sells equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. The Welding segment produces arc welding equipment; and metal arc welding consumables and related accessories. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment offers engineered fastening systems and solutions for the residential construction, renovation/remodel, and commercial construction markets. The Specialty Products segment provides beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. It serves the automotive OEM and tiers, MRO, commercial food equipment, construction, general industrial, industrial capital goods, consumer durables, automotive aftermarket end, and other markets. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912 and is based in Glenview, Illinois.

About Japan Steel Works

The Japan Steel Works, Ltd. engages in the provision of industrial machinery products, and material and engineering business in Japan and internationally. It operates through Industrial Machinery Products Business, and Material and Engineering Business segments. The Industrial Machinery Products Business segment offers plastic production and processing machinery, such as pelletizers, film and sheet manufacturing equipment, and twin-screw extruders; molding machines including plastic injection molding, magnesium injection molding, and blow molding machines; and other machinery consists of excimer laser annealing systems, defense equipment, railway products, hot press devices, vacuum laminators, and deposit systems, as well as after-sales services for plastics, mobility, high-performance batteries, electronic devices, and defense applications. The Material and Engineering Business segment provides steel casting and forgings, such as reactor and steam generator parts, rotor shafts, turbine casings, die steel, steel rolls for steel manufacturing, and clad steel plates; and engineering and other services, including design and analysis, welded structures, inspection and survey, and hydrogen pressure accumulators and related products for use in power generation equipment, renewable energy, and infrastructure applications. The company offers photonics, composite materials, and metallic materials for use in semiconductors and electronic devices, cameras and sensing devices, aircraft and mobility components, and electronic parts. The Japan Steel Works, Ltd. was founded in 1907 and is headquartered in Shinagawa, Japan.