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

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Powell Industries	$1.01 billion	3.14	$149.85 million	$14.40	18.32
AZZ	$1.58 billion	2.14	$128.83 million	$8.63	13.04

Powell Industries has higher earnings, but lower revenue 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.

Volatility & Risk

Powell Industries has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500. Comparatively, AZZ has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500.

Dividends

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

Profitability

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

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Powell Industries and AZZ, as reported by MarketBeat.com.

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

Powell Industries presently has a consensus target price of $312.00, indicating a potential upside of 18.28%. AZZ has a consensus target price of $112.29, indicating a potential downside of 0.22%. Given Powell Industries’ stronger consensus rating and higher probable upside, equities analysts plainly believe Powell Industries is more favorable than AZZ.

Insider and Institutional Ownership

89.8% of Powell Industries shares are held by institutional investors. Comparatively, 90.9% of AZZ shares are held by institutional investors. 2.2% of Powell Industries shares are held by insiders. Comparatively, 1.8% of AZZ shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Powell Industries beats AZZ on 11 of the 18 factors compared between the two stocks.

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.

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.