Critical Survey: Flowserve (NYSE:FLS) & Atlas Copco (OTCMKTS:ATLKY)

Atlas Copco (OTCMKTS:ATLKY) and Flowserve (NYSE:FLS) are both industrials companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, earnings, risk and valuation.

Risk & Volatility

Atlas Copco has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500. Comparatively, Flowserve has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500.

Earnings and Valuation

This table compares Atlas Copco and Flowserve”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atlas Copco	$16.72 billion	4.39	$2.82 billion	$0.56	26.91
Flowserve	$4.56 billion	1.54	$282.76 million	$2.21	24.33

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

Dividends

Atlas Copco pays an annual dividend of $0.26 per share and has a dividend yield of 1.7%. Flowserve pays an annual dividend of $0.84 per share and has a dividend yield of 1.6%. Atlas Copco pays out 46.4% of its earnings in the form of a dividend. Flowserve 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. Flowserve has raised its dividend for 1 consecutive years.

Profitability

This table compares Atlas Copco and Flowserve’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Atlas Copco	16.22%	26.14%	13.83%
Flowserve	6.28%	18.25%	7.12%

Insider & Institutional Ownership

0.0% of Atlas Copco shares are owned by institutional investors. Comparatively, 93.9% of Flowserve shares are owned by institutional investors. 0.7% of Flowserve shares are owned 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.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Atlas Copco and Flowserve, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atlas Copco	0	1	0	0	2.00
Flowserve	0	1	8	1	3.00

Flowserve has a consensus price target of $65.7778, indicating a potential upside of 22.34%. Given Flowserve’s stronger consensus rating and higher probable upside, analysts clearly believe Flowserve is more favorable than Atlas Copco.

About Atlas Copco

Atlas Copco AB provides compressed air and gas, vacuum, energy, dewatering and industrial pump, industrial power tool, and assembly and machine vision solutions in North America, South America, Europe, Africa, the Middle East, Asia, and Oceania. It operates through Compressor Technique, Vacuum Technique, Industrial Technique, and Power Technique segments. The company offers piston compressors, oil-free tooth and scroll compressors, rotary screw compressors, oil-free blowers, oil-free centrifugal compressors, gas and process compressors, air and gas treatment equipment, expanders and pumps, and medical air solutions. It also provides oil-sealed rotary vane, dry, and liquid ring vacuum pumps; turbomolecular and cryogenic pumps; abatement and integrated systems; industrial assembly tools and solutions; self-pierce riveting solutions; adhesive dispensing and flow drill fastening equipment; material removal tools, and drills and other pneumatic products; machine vision solutions; construction and demolition tools; mobile compressors, generators, and energy storage systems; and industrial flow, portable power, portable flow, and portable air products, as well as specialty rental services. The company serves the semiconductor and flat panel, industrial manufacturing, civil engineering, demolition, exploration drilling, automotive, off-highway vehicles, electronics, aerospace, energy, food, pharmaceutical, textile, and other industries. Atlas Copco AB was founded in 1873 and is headquartered in Nacka, Sweden.

About Flowserve

Flowserve Corporation designs, manufactures, distributes, and services industrial flow management equipment in the United States, Canada, Mexico, Europe, the Middle East, Africa, and the Asia Pacific. It operates through Flowserve Pump Division (FPD) and Flow Control Division (FCD) segments. The FPD segment offers custom and pre-configured pumps and pump systems, mechanical seals, auxiliary systems, replacement parts, upgrades, and related aftermarket services; and equipment services, including installation and commissioning services, seal systems spare parts, repairs, advanced diagnostics, re-rate and upgrade solutions, retrofit programs, and machining and asset management solutions, as well as manufactures a gas-lubricated mechanical seal for use in high-speed compressors for gas pipelines and in the oil and gas production and process markets. The FCD segment provides engineered and industrial valve and automation systems, including isolation and control valves, actuation, controls, and related equipment; and equipment maintenance services for flow control systems, including advanced diagnostics, repair, installation, commissioning, retrofit programs, and field machining capabilities. This segment's products are used to control, direct, and manage the flow of liquids, gases, and multi-phase fluids. It primarily serves oil and gas, chemical and pharmaceuticals, power generation, and water management markets, as well as general industries, including mining and ore processing, pulp and paper, food and beverage, and other smaller applications. The company distributes its products through direct sales, distributors, and sales representatives. Flowserve Corporation was founded in 1790 and is headquartered in Irving, Texas.