Contrasting AZZ (NYSE:AZZ) & Eaton (NYSE:ETN)

AZZ (NYSE:AZZ) and Eaton (NYSE:ETN) are both industrials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, risk, dividends, analyst recommendations and institutional ownership.

Dividends

AZZ pays an annual dividend of $0.80 per share and has a dividend yield of 0.7%. Eaton pays an annual dividend of $4.16 per share and has a dividend yield of 1.1%. AZZ pays out 9.3% of its earnings in the form of a dividend. Eaton pays out 41.9% 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.

Institutional & Insider Ownership

90.9% of AZZ shares are owned by institutional investors. Comparatively, 83.0% of Eaton shares are owned by institutional investors. 1.8% of AZZ shares are owned by insiders. Comparatively, 0.3% of Eaton shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares AZZ and Eaton’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AZZ	16.40%	15.54%	7.51%
Eaton	15.11%	23.91%	11.38%

Valuation & Earnings

This table compares AZZ and Eaton”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AZZ	$1.58 billion	2.10	$128.83 million	$8.63	12.78
Eaton	$24.88 billion	5.68	$3.79 billion	$9.94	36.53

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

Analyst Recommendations

This is a summary of current recommendations and price targets for AZZ and Eaton, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AZZ	0	2	5	1	2.88
Eaton	0	6	14	0	2.70

AZZ currently has a consensus price target of $108.00, indicating a potential downside of 2.06%. Eaton has a consensus price target of $383.6316, indicating a potential upside of 5.66%. Given Eaton’s higher probable upside, analysts plainly believe Eaton is more favorable than AZZ.

Volatility and Risk

AZZ has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, Eaton has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500.

Summary

Eaton beats AZZ on 10 of the 17 factors compared between the two stocks.

About AZZ

AZZ Inc. provides hot-dip galvanizing and coil coating solutions in North America. It offers metal finishing solutions for corrosion protection, including hot-dip galvanizing, spin galvanizing, powder coating, anodizing, and plating to steel fabrication and other industries, as well as to fabricators or manufacturers that provide services to the transmission and distribution, bridge and highway, petrochemical, and general industrial markets; and original equipment manufacturers. It also provides aesthetic and corrosion protective coatings and related value-added services for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation, and air conditioning; container; transportation; and other end markets. The company was incorporated in 1956 and is headquartered in Fort Worth, Texas.

About Eaton

Eaton Corporation plc operates as a power management company worldwide. The company’s Electrical Americas and Electrical Global segment provides electrical components, industrial components, power distribution and assemblies, residential products, single and three phase power quality and connectivity products, wiring devices, circuit protection products, utility power distribution products, power reliability equipment, and services, as well as hazardous duty electrical equipment, emergency lighting, fire detection, explosion-proof instrumentation, and structural support systems. Its Aerospace segment offers pumps, motors, hydraulic power units, hoses and fittings, and electro-hydraulic pumps; valves, cylinders, electronic controls, electromechanical actuators, sensors, aircraft flap and slat systems, and nose wheel steering systems; hose, thermoplastic tubing products, fittings, adapters, couplings, and sealing and ducting products; air-to-air refueling systems, fuel pumps, fuel inerting products, sensors, and adapters and regulators; oxygen generation system, payload carriages, and thermal management products; and wiring connectors and cables, as well as hydraulic and bag filters, strainers and cartridges, and golf grips for manufacturers of commercial and military aircraft, and related after-market customers, as well as industrial applications. The company’s Vehicle segment offers transmissions, clutches, hybrid power systems, superchargers, engine valves and valve actuation systems, locking and limited slip differentials, transmission controls, and fuel vapor components for the vehicle industry. Its eMobility segment provides voltage inverters, converters, fuses, circuit protection units, vehicle controls, power distribution systems, fuel tank isolation valves, and commercial vehicle hybrid systems. Eaton Corporation plc was founded in 1911 and is based in Dublin, Ireland.