Critical Contrast: Ternium (NYSE:TX) & ThyssenKrupp (OTCMKTS:TKAMY)

ThyssenKrupp (OTCMKTS:TKAMY) 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 risk, analyst recommendations, profitability, valuation, institutional ownership, earnings and dividends.

Insider and Institutional Ownership

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

Risk & Volatility

ThyssenKrupp has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500. Comparatively, Ternium has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500.

Dividends

ThyssenKrupp pays an annual dividend of $0.10 per share and has a dividend yield of 1.0%. Ternium pays an annual dividend of $1.80 per share and has a dividend yield of 4.7%. ThyssenKrupp pays out -7.0% of its earnings in the form of a dividend. Ternium pays out 60.6% 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.

Analyst Ratings

This is a summary of recent ratings for ThyssenKrupp and Ternium, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ThyssenKrupp	1	2	1	1	2.40
Ternium	2	4	4	1	2.36

Ternium has a consensus price target of $34.69, indicating a potential downside of 8.85%. Given Ternium’s higher probable upside, analysts clearly believe Ternium is more favorable than ThyssenKrupp.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ThyssenKrupp	2.80%	9.26%	3.28%
Ternium	3.72%	1.89%	1.31%

Valuation and Earnings

This table compares ThyssenKrupp and Ternium”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ThyssenKrupp	$36.31 billion	0.18	-$1.63 billion	($1.42)	-7.36
Ternium	$17.65 billion	0.43	-$53.67 million	$2.97	12.81

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

Summary

Ternium beats ThyssenKrupp on 11 of the 16 factors compared between the two stocks.

About ThyssenKrupp

thyssenkrupp AG operates as an industrial and technology company in Germany and internationally. It operates through five segments: Automotive Technology, Decarbon Technologies, Materials Services, Steel Europe, and Marine Systems. The Automotive Technology segment offers components, systems, and automation solutions for vehicle manufacturing, such as axle assembly, body in white, camshafts and electric engine components, dampers, dies, springs and stabilizers, crankshafts and conrods, steering, and undercarriages. The Decarbon Technologies segment provides slewing bearings and rings, green ammonia and methanol, chemical and cement plants, high pressure processing, and refinery services, as well as green hydrogen. The Marine System segment manufactures submarines, naval services, and naval surface vessels. The Material Services segment offers 3D-printing/additive manufacturing, alloys, infrastructure project and services, industrial minerals, logistics services, metals, nonferrous metals, plastics, rolled steel, special ores, and stainless steel. The Steel Europe segment manufactures composite materials, electrical steel, hot strips, organic coated strips and sheet, packaging steel, precision steel strip, and sheet and coated products. thyssenkrupp AG was founded in 1811 and is headquartered in Essen, Germany.

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.