Critical Review: Hillenbrand (NYSE:HI) and Ashtead Group (OTCMKTS:ASHTY)

Ashtead Group (OTCMKTS:ASHTY) and Hillenbrand (NYSE:HI) are both industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, risk, institutional ownership, earnings and analyst recommendations.

Valuation and Earnings

This table compares Ashtead Group and Hillenbrand”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ashtead Group	$10.79 billion	2.63	$1.51 billion	$13.65	19.67
Hillenbrand	$2.86 billion	0.67	-$211.00 million	($0.25)	-108.08

Ashtead Group has higher revenue and earnings than Hillenbrand. Hillenbrand is trading at a lower price-to-earnings ratio than Ashtead Group, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings for Ashtead Group and Hillenbrand, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ashtead Group	1	3	2	0	2.17
Hillenbrand	0	2	0	1	2.67

Hillenbrand has a consensus target price of $32.00, indicating a potential upside of 18.43%. Given Hillenbrand’s stronger consensus rating and higher probable upside, analysts plainly believe Hillenbrand is more favorable than Ashtead Group.

Institutional and Insider Ownership

0.8% of Ashtead Group shares are held by institutional investors. Comparatively, 89.1% of Hillenbrand shares are held by institutional investors. 2.0% of Hillenbrand shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Ashtead Group and Hillenbrand’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ashtead Group	13.68%	20.89%	7.26%
Hillenbrand	-0.63%	13.53%	3.82%

Risk and Volatility

Ashtead Group has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500. Comparatively, Hillenbrand has a beta of 1.47, indicating that its stock price is 47% more volatile than the S&P 500.

Dividends

Ashtead Group pays an annual dividend of $5.63 per share and has a dividend yield of 2.1%. Hillenbrand pays an annual dividend of $0.90 per share and has a dividend yield of 3.3%. Ashtead Group pays out 41.2% of its earnings in the form of a dividend. Hillenbrand pays out -360.0% 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. Hillenbrand has raised its dividend for 18 consecutive years. Hillenbrand is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Ashtead Group beats Hillenbrand on 10 of the 18 factors compared between the two stocks.

About Ashtead Group

Ashtead Group plc, together with its subsidiaries, engages in the construction, industrial, and general equipment rental business in the United States, the United Kingdom, and Canada. It provides pumps, power generation, heating, cooling, scaffolding, traffic management, temporary flooring, trench shoring, and lifting services. The company offers its products and services for facilities maintenance and municipalities, such as office complexes, apartment complexes, government, hospitals, data centers, parks and recreation departments, schools and universities, shopping centers, pavement/kerb repairs, and golf course maintenance; construction of airports, highways and bridges, office buildings, data centers, schools and universities, shopping centers, residential, remodeling, manufacturing plants, and green energy plants; emergency response for fire, hurricanes, flooding, tornadoes, winter, storms, residential and health emergencies, alternative care facilities, points of distribution, and mobile testing facilities; and entertainment and special events, including national events, concerts, sporting events, film and telvision production, theme parks, festivals farmers' markets, local 5k runs, and cycle races. It operates 1,094 stores in the United States, 119 stores in Canada, and 185 stores in the United Kingdom under the Sunbelt Rentals brand. The company was founded in 1947 and is headquartered in London, the United Kingdom.

About Hillenbrand

Hillenbrand, Inc. operates as an industrial company in the United States and internationally. The company operates through two segments, Advanced Process Solutions and Molding Technology Solutions. The Advanced Process Solutions segment designs, engineers, manufactures, markets, and services process and material handling equipment and systems comprising compounding, extrusion, and material handling equipment, equipment system design services, as well as offers mixing technology, ingredient automation, and portion process; and provides screening and separating equipment for various industries, including plastics, food and pharmaceuticals, chemicals, fertilizers, minerals, energy, wastewater treatment, forest products, and other general industrials. The Molding Technology Solutions segment offers injection molding and extrusion equipment; hot runner systems; process control systems; mold bases and components; maintenance and repair services; and aftermarket parts and service for various industries, including automotive, consumer goods, medical, packaging, construction, and electronics. The company was founded in 1906 and is headquartered in Batesville, Indiana.