Head-To-Head Review: Olympic Steel (NASDAQ:ZEUS) & Outokumpu (OTCMKTS:OUTKY)

Olympic Steel (NASDAQ:ZEUS) and Outokumpu (OTCMKTS:OUTKY) are both small-cap basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, analyst recommendations, profitability, institutional ownership and earnings.

Profitability

This table compares Olympic Steel and Outokumpu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Olympic Steel	0.77%	1.95%	1.07%
Outokumpu	-0.82%	-1.33%	-0.82%

Valuation and Earnings

This table compares Olympic Steel and Outokumpu”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Olympic Steel	$1.94 billion	0.20	$22.98 million	$1.22	27.71
Outokumpu	$6.43 billion	0.28	-$43.28 million	($0.05)	-37.80

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

Insider and Institutional Ownership

87.1% of Olympic Steel shares are held by institutional investors. 13.8% of Olympic Steel shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Olympic Steel and Outokumpu, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Olympic Steel	0	0	1	0	3.00
Outokumpu	2	1	0	0	1.33

Olympic Steel presently has a consensus target price of $38.00, indicating a potential upside of 12.39%. Given Olympic Steel’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Olympic Steel is more favorable than Outokumpu.

Volatility & Risk

Olympic Steel has a beta of 1.77, suggesting that its share price is 77% more volatile than the S&P 500. Comparatively, Outokumpu has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500.

Dividends

Olympic Steel pays an annual dividend of $0.64 per share and has a dividend yield of 1.9%. Outokumpu pays an annual dividend of $0.04 per share and has a dividend yield of 2.1%. Olympic Steel pays out 52.5% of its earnings in the form of a dividend. Outokumpu pays out -80.0% 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. Olympic Steel has increased its dividend for 4 consecutive years. Outokumpu is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Olympic Steel beats Outokumpu on 13 of the 17 factors compared between the two stocks.

About Olympic Steel

Olympic Steel, Inc. processes, distributes, and stores metal products primarily in the United States, Canada, and Mexico. It operates in three segments: Carbon Flat Products; Specialty Metals Flat Products; and Tubular and Pipe Products. The company offers stainless steel and aluminum coil and sheet products, angles, rounds, and flat bars; alloy, heat treated, and abrasion resistant coils, sheets and plates; coated metals, including galvanized, galvannealed, electro galvanized, advanced high strength steels, aluminized, and automotive grades of steel; commercial quality, advanced high strength steel, drawing steel, and automotive grades cold rolled steel coil and sheet products; hot rolled carbon comprising hot rolled coil, pickled and oiled sheet and plate steel products, automotive grades, advanced high strength steels, and high strength low alloys; tube, pipe, and bar products, including round, square, and rectangular mechanical and structural tubing; hydraulic and stainless tubing; boiler tubing; carbon, stainless, and aluminum pipes; valves and fittings; and tin mill products, such as electrolytic tinplate, electrolytic chromium coated steel, and black plates. The company also provides cutting-to-length, slitting, shearing, blanking, tempering, stretcher-leveling, plate and laser processing, forming and machining, tube processing, finishing, and fabrication services, as well as value-added services, such as saw cutting, laser cutting, beveling, threading, and grooving services. It serves metal consuming industries, such as manufacturers and fabricators of transportation and material handling lift equipment, construction, mining and farm equipment, agriculture equipment, storage tanks, environmental and energy generation equipment, automobiles, food service, and electrical equipment, as well as general and plate fabricators, and metals service centers through direct sales force. Olympic Steel, Inc. was founded in 1954 and is based in Highland Hills, Ohio.

About Outokumpu

Outokumpu Oyj produces and sells various stainless steel products in Finland, other European countries, North America, the Asia-Pacific, and internationally. The company operates through three segments: Europe, Americas, and Ferrochrome. It offers cold rolled coils, strips, and sheets; hot rolled coils, strips, and plates; quarto plates; precision strips; and specialized components, such as welded stainless-steel I-beams, H-beams, hollow-section tubes, bent profiles, structural sections, hardened and customized press plates, suction roll shells, and blancs and disks. The company also provides stainless steel powder which includes Supra 316L, Dura 17-4PH, Ultra 904L, Therma 253MA, Dura 4116, and Ni-free austenitic stainless steel powder; and nickel-based alloys. Its products are used in various applications, including commercial kitchen, cooking, food industry, and home appliances; automotive and transportation; building and infrastructure; energy; marine; and heavy industries. The company was founded in 1910 and is headquartered in Helsinki, Finland.