Comparing Ternium (NYSE:TX) & Outokumpu (OTCMKTS:OUTKY)

Outokumpu (OTCMKTS:OUTKY) and Ternium (NYSE:TX) are both mid-cap basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.

Analyst Ratings

This is a summary of current recommendations and price targets for Outokumpu and Ternium, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Outokumpu	2	1	0	0	1.33
Ternium	2	2	2	0	2.00

Ternium has a consensus target price of $32.67, suggesting a potential downside of 5.08%. Given Ternium’s stronger consensus rating and higher possible upside, analysts clearly believe Ternium is more favorable than Outokumpu.

Earnings and Valuation

This table compares Outokumpu and Ternium”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Outokumpu	$6.43 billion	0.32	-$43.28 million	($0.05)	-44.00
Ternium	$17.65 billion	0.39	-$53.67 million	$3.03	11.36

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

Institutional & Insider Ownership

12.0% of Ternium shares are held by institutional investors. 0.0% of Ternium shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Outokumpu pays an annual dividend of $0.04 per share and has a dividend yield of 1.8%. Ternium pays an annual dividend of $3.60 per share and has a dividend yield of 10.5%. Outokumpu pays out -80.0% of its earnings in the form of a dividend. Ternium pays out 118.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Outokumpu	-0.82%	-1.33%	-0.82%
Ternium	3.66%	1.95%	1.35%

Volatility & Risk

Outokumpu has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Ternium has a beta of 1.47, indicating that its share price is 47% more volatile than the S&P 500.

Summary

Ternium beats Outokumpu on 14 of the 16 factors compared between the two stocks.

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.

About Ternium

Ternium S.A., together with its subsidiaries, manufactures and distributes steel products in Mexico, Southern Region, Brazil, and internationally. It operates through three segments: Steel, Mining, and Usiminas. The Steel segment offers slabs, hot and cold rolled products, coated products, roll formed and tubular products, bars, billets, and other products. Its Mining segment sells iron ore and pellets. The Usiminas segment offers iron ore extraction, steel transformation, and production of capital goods and logistics; and manufactures and sells various products and raw materials, such as flat steel, iron ore, and stamped steel parts for the automotive industry and products for the civil construction and capital goods industry. It also provides medical and social; scrap; renewable energy; and engineering and other services, as well as operates as a distribution company. In addition, the company engages in the exploration, exploitation, and pelletizing of iron ore. Ternium S.A. was founded in 1961 and is based in Luxembourg City, Luxembourg. Ternium S.A. is a subsidiary of Techint Holdings S.à r.l.