Critical Contrast: MSC Industrial Direct (NYSE:MSM) & Andritz (OTCMKTS:ADRZY)

MSC Industrial Direct (NYSE:MSM) and Andritz (OTCMKTS:ADRZY) are both mid-cap industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, risk, institutional ownership, valuation, dividends and profitability.

Institutional & Insider Ownership

79.3% of MSC Industrial Direct shares are owned by institutional investors. 19.0% of MSC Industrial Direct shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

MSC Industrial Direct has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Andritz has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.

Dividends

MSC Industrial Direct pays an annual dividend of $3.48 per share and has a dividend yield of 4.1%. Andritz pays an annual dividend of $0.35 per share and has a dividend yield of 2.3%. MSC Industrial Direct pays out 97.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Andritz pays out 34.0% of its earnings in the form of a dividend. MSC Industrial Direct has raised its dividend for 3 consecutive years. MSC Industrial Direct is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations for MSC Industrial Direct and Andritz, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MSC Industrial Direct	0	6	1	0	2.14
Andritz	0	1	1	0	2.50

MSC Industrial Direct currently has a consensus target price of $91.50, indicating a potential upside of 6.73%. Given MSC Industrial Direct’s higher probable upside, equities analysts clearly believe MSC Industrial Direct is more favorable than Andritz.

Valuation and Earnings

This table compares MSC Industrial Direct and Andritz”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MSC Industrial Direct	$3.77 billion	1.27	$199.33 million	$3.56	24.08
Andritz	$9.00 billion	0.87	$537.26 million	$1.03	14.63

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

Profitability

This table compares MSC Industrial Direct and Andritz’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MSC Industrial Direct	5.29%	15.21%	8.50%
Andritz	5.84%	20.50%	5.64%

Summary

MSC Industrial Direct beats Andritz on 9 of the 16 factors compared between the two stocks.

About MSC Industrial Direct

MSC Industrial Direct Co., Inc., together with its subsidiaries, distributes metalworking and maintenance, repair, and operations (MRO) products and services in the United States, Canada, Mexico, the United Kingdom, and internationally. The company's MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock products, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components, and electrical supplies. It offers stock-keeping units through its catalogs and brochures; e-commerce channels, including its website, mscdirect.com; inventory management solutions; and customer care centers, customer fulfillment centers, regional inventory centers, and warehouses. The company serves individual machine shops, manufacturing companies, and government agencies. MSC Industrial Direct Co., Inc. was founded in 1941 and is headquartered in Melville, New York.

About Andritz

Andritz AG provides plants, equipment, and services for pulp and paper industry, metalworking and steel industries, hydropower stations, and solid/liquid separation in the municipal and industrial sectors in Europe, North America, South America, China, Asia, and internationally. It operates through four segments: Pulp & Paper, Metals, Hydro, and Separation. The Pulp & Paper segment supplies technology, automation, and service solutions to produce pulp, paper, board, and tissue; boilers for power generation; flue gas cleaning systems; nonwovens technologies; panelboard production systems; and recycling, shredding, and energy solutions for various waste materials. The Metals segment provides technologies, plants, and digital solutions, including automation and software solutions, and process know-how and services; and solutions for the production and processing of flat products for welding systems and industrial furnaces, as well as services for the metals processing industry. The Hydro segment supplies electromechanical equipment and services for hydropower plants; offers plant diagnosis, refurbishment, modernization, and upgradation of existing hydropower plants; and pumps for irrigation, water supply, and flood control, as well as turbo generators. The Separation segment offers mechanical and thermal technologies, as well as services and related automation solutions for solid/liquid separation to serve chemical, environmental, food, mining, and minerals industries; and technologies and services to produce animal feed and biomass pellets. The company was founded in 1852 and is headquartered in Graz, Austria.