Reviewing AZZ (NYSE:AZZ) and Powell Industries (NASDAQ:POWL)

AZZ (NYSE:AZZ) and Powell Industries (NASDAQ:POWL) are both mid-cap industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, earnings, profitability, analyst recommendations, institutional ownership, valuation and dividends.

Institutional & Insider Ownership

90.9% of AZZ shares are held by institutional investors. Comparatively, 89.8% of Powell Industries shares are held by institutional investors. 1.8% of AZZ shares are held by insiders. Comparatively, 2.2% of Powell Industries 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 AZZ and Powell Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AZZ	16.40%	15.54%	7.51%
Powell Industries	16.22%	33.16%	18.23%

Analyst Ratings

This is a summary of recent ratings and price targets for AZZ and Powell Industries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AZZ	0	3	5	2	2.90
Powell Industries	0	0	1	1	3.50

AZZ presently has a consensus target price of $112.2857, suggesting a potential upside of 0.36%. Powell Industries has a consensus target price of $312.00, suggesting a potential upside of 24.34%. Given Powell Industries’ stronger consensus rating and higher possible upside, analysts clearly believe Powell Industries is more favorable than AZZ.

Earnings & Valuation

This table compares AZZ and Powell Industries”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AZZ	$1.58 billion	2.13	$128.83 million	$8.63	12.96
Powell Industries	$1.01 billion	2.99	$149.85 million	$14.40	17.43

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

Dividends

AZZ pays an annual dividend of $0.80 per share and has a dividend yield of 0.7%. Powell Industries pays an annual dividend of $1.07 per share and has a dividend yield of 0.4%. AZZ pays out 9.3% of its earnings in the form of a dividend. Powell Industries pays out 7.4% 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. Powell Industries has increased its dividend for 3 consecutive years.

Risk and Volatility

AZZ has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500. Comparatively, Powell Industries has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500.

Summary

Powell Industries beats AZZ on 11 of the 18 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 Powell Industries

Powell Industries, Inc., together with its subsidiaries, designs, develops, manufactures, sells, and services custom-engineered equipment and systems. The company’s principal products include integrated power control room substations, custom-engineered modules, electrical houses, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches, and bus duct systems, as well as traditional and arc-resistant distribution switchgears and control gears. Its products have application in voltages ranging from 480 volts to 38,000 volts. The company also provide field service inspection, installation, commissioning, modification and repair, spare parts, retrofit and retrofill components for existing systems, and replacement circuit breakers for switchgear. It serves onshore and offshore production, liquefied natural gas facilities and terminals, pipelines, refineries, and petrochemical plants, as well as electric utility, light rail traction power, mining and metals, pulp and paper, data centers and other municipal, commercial, and industrial markets. The company has operations in the United States, Canada, the Middle East, Africa, Europe, Mexico, and Central and South America. Powell Industries, Inc. was founded in 1947 and is headquartered in Houston, Texas.