Atlas Copco (OTCMKTS:ATLKY) versus Gates Industrial (NYSE:GTES) Critical Contrast

Atlas Copco (OTCMKTS:ATLKY) and Gates Industrial (NYSE:GTES) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitability, analyst recommendations and valuation.

Analyst Ratings

This is a summary of recent recommendations and price targets for Atlas Copco and Gates Industrial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atlas Copco	1	2	2	0	2.20
Gates Industrial	0	5	7	0	2.58

Gates Industrial has a consensus target price of $27.64, suggesting a potential upside of 26.74%. Given Gates Industrial’s stronger consensus rating and higher possible upside, analysts plainly believe Gates Industrial is more favorable than Atlas Copco.

Earnings & Valuation

This table compares Atlas Copco and Gates Industrial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atlas Copco	$16.72 billion	4.84	$2.82 billion	$0.56	29.63
Gates Industrial	$3.41 billion	1.65	$194.90 million	$0.91	23.96

Atlas Copco has higher revenue and earnings than Gates Industrial. Gates Industrial is trading at a lower price-to-earnings ratio than Atlas Copco, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Atlas Copco and Gates Industrial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Atlas Copco	16.08%	25.84%	13.83%
Gates Industrial	6.93%	10.38%	5.22%

Volatility & Risk

Atlas Copco has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500. Comparatively, Gates Industrial has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500.

Insider and Institutional Ownership

0.0% of Atlas Copco shares are held by institutional investors. Comparatively, 98.5% of Gates Industrial shares are held by institutional investors. 2.7% of Gates Industrial shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Atlas Copco beats Gates Industrial on 8 of the 14 factors compared between the two stocks.

About Atlas Copco

Atlas Copco AB provides compressed air and gas, vacuum, energy, dewatering and industrial pump, industrial power tool, and assembly and machine vision solutions in North America, South America, Europe, Africa, the Middle East, Asia, and Oceania. It operates through Compressor Technique, Vacuum Technique, Industrial Technique, and Power Technique segments. The company offers piston compressors, oil-free tooth and scroll compressors, rotary screw compressors, oil-free blowers, oil-free centrifugal compressors, gas and process compressors, air and gas treatment equipment, expanders and pumps, and medical air solutions. It also provides oil-sealed rotary vane, dry, and liquid ring vacuum pumps; turbomolecular and cryogenic pumps; abatement and integrated systems; industrial assembly tools and solutions; self-pierce riveting solutions; adhesive dispensing and flow drill fastening equipment; material removal tools, and drills and other pneumatic products; machine vision solutions; construction and demolition tools; mobile compressors, generators, and energy storage systems; and industrial flow, portable power, portable flow, and portable air products, as well as specialty rental services. The company serves the semiconductor and flat panel, industrial manufacturing, civil engineering, demolition, exploration drilling, automotive, off-highway vehicles, electronics, aerospace, energy, food, pharmaceutical, textile, and other industries. Atlas Copco AB was founded in 1873 and is headquartered in Nacka, Sweden.

About Gates Industrial

Gates Industrial Corporation PLC designs and manufactures power transmission equipment. Its products serves harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners and virtually every form of transportation.