Analyzing Friedman Industries (NASDAQ:FRD) & NN (NASDAQ:NNBR)

Friedman Industries (NASDAQ:FRD) and NN (NASDAQ:NNBR) are both small-cap industrials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, earnings, institutional ownership, profitability, risk, dividends and analyst recommendations.

Valuation and Earnings

This table compares Friedman Industries and NN”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Friedman Industries	$444.60 million	0.27	$6.09 million	$1.20	14.08
NN	$464.29 million	0.25	-$38.27 million	($1.13)	-2.04

Friedman Industries has higher earnings, but lower revenue than NN. NN is trading at a lower price-to-earnings ratio than Friedman Industries, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Friedman Industries and NN, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Friedman Industries	0	0	0	0	0.00
NN	0	0	0	1	4.00

NN has a consensus target price of $4.00, suggesting a potential upside of 73.91%. Given NN’s stronger consensus rating and higher possible upside, analysts clearly believe NN is more favorable than Friedman Industries.

Insider and Institutional Ownership

33.3% of Friedman Industries shares are held by institutional investors. Comparatively, 53.9% of NN shares are held by institutional investors. 5.5% of Friedman Industries shares are held by insiders. Comparatively, 7.9% of NN shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Friedman Industries and NN’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Friedman Industries	1.84%	6.50%	3.95%
NN	-8.84%	-5.29%	-0.88%

Volatility & Risk

Friedman Industries has a beta of 1.51, suggesting that its share price is 51% more volatile than the S&P 500. Comparatively, NN has a beta of 2.03, suggesting that its share price is 103% more volatile than the S&P 500.

About Friedman Industries

Friedman Industries, Incorporated engages in steel processing, pipe manufacturing and processing, and the steel and pipe distribution businesses the United States. It operates in two segments, Coil and Tubular. The Coil segment is involved in the conversion of steel coils into flat sheet and plate steel cut to customer specifications and reselling steel coils. This segment also processes customer-owned coils on a fee basis. The company sells coil products and processing services to approximately 200 customers located primarily in the midwestern, southwestern and southeastern regions of the United States. Its principal customers for these products and services are steel distributors and customers manufacturing steel products, such as steel buildings, railroad cars, barges, tanks and containers, trailers, component parts and other fabricated steel products. The Tubular segment manufactures line and oil country pipes, as well as pipes for structural applications. This segment sells its tubular products principally to steel and pipe distributors through its own sales force. The company was incorporated in 1965 and is headquartered in Longview, Texas.

About NN

NN, Inc., together with its subsidiaries, designs, manufactures, and sells high-precision components and assemblies for various end markets in the United States and internationally. It operates through two segments, Mobile Solutions and Power Solutions. The Mobile Solutions segment manufactures and sells system critical components for automotive, general industrial, and medical end markets for use in power steering, braking, transmissions, gasoline fuel system, diesel injection, and diesel emissions treatment applications, as well as in heating, ventilation, and air conditioning. The Power Solutions segment designs, manufactures, and sells a range of high-precision metal and plastic components, assemblies, and finished devices used in various applications, such as power control and transportation electrification. Its products include electrical contacts, connectors, contact assemblies, and precision stampings for the electrical, general industrial, automotive, aerospace and defense, and medical end markets. This segment also produces various tools and instruments for the orthopaedics and medical/surgical end markets. NN, Inc. was founded in 1980 and is headquartered in Charlotte, North Carolina.