Contrasting Ferguson (NYSE:FERG) & Otis Worldwide (NYSE:OTIS)

Otis Worldwide (NYSE:OTIS) and Ferguson (NYSE:FERG) are both large-cap industrials companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, institutional ownership, dividends and earnings.

Institutional and Insider Ownership

88.0% of Otis Worldwide shares are owned by institutional investors. Comparatively, 82.0% of Ferguson shares are owned by institutional investors. 0.2% of Otis Worldwide shares are owned by company insiders. Comparatively, 0.2% of Ferguson shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Otis Worldwide pays an annual dividend of $1.68 per share and has a dividend yield of 2.0%. Ferguson pays an annual dividend of $3.56 per share and has a dividend yield of 1.6%. Otis Worldwide pays out 48.0% of its earnings in the form of a dividend. Ferguson pays out 36.0% 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. Otis Worldwide has increased its dividend for 5 consecutive years. Otis Worldwide is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Otis Worldwide and Ferguson’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Otis Worldwide	9.59%	-30.42%	14.84%
Ferguson	6.93%	40.37%	13.36%

Volatility & Risk

Otis Worldwide has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Ferguson has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Otis Worldwide and Ferguson, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Otis Worldwide	1	6	3	0	2.20
Ferguson	0	5	11	2	2.83

Otis Worldwide presently has a consensus target price of $101.44, indicating a potential upside of 22.57%. Ferguson has a consensus target price of $268.93, indicating a potential upside of 22.35%. Given Otis Worldwide’s higher probable upside, analysts plainly believe Otis Worldwide is more favorable than Ferguson.

Valuation and Earnings

This table compares Otis Worldwide and Ferguson”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Otis Worldwide	$14.43 billion	2.23	$1.38 billion	$3.50	23.65
Ferguson	$30.76 billion	1.39	$1.86 billion	$9.90	22.20

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

About Otis Worldwide

Otis Worldwide Corporation engages in manufacturing, installation, and servicing of elevators and escalators in the United States, China, and internationally. The company operates in two segments, New Equipment and Service. The New Equipment segment designs, manufactures, sells, and installs a range of passenger and freight elevators, as well as escalators and moving walkways for residential and commercial buildings, and infrastructure projects. This segment serves real-estate and building developers, and general contractors. It sells its products directly to customers, as well as through agents and distributors. The Service segment performs maintenance and repair services, as well as modernization services to upgrade elevators and escalators. Otis Worldwide Corporation was founded in 1853 and is headquartered in Farmington, Connecticut.

About Ferguson

Ferguson Enterprises Inc. distributes plumbing and heating products in North America. The company provides expertise, solutions, and products, including infrastructure, plumbing, appliances, fire, and fabrication, as well as heating, ventilation, and air conditioning (HVAC) to residential and non-residential customers. It also supplies specialist water and wastewater treatment products to residential, commercial, and infrastructure contractors, as well as supplies pipe, valves, and fittings solutions to industrial customers. In addition, it offers customized solutions, such as virtual design, fabrication, valve actuation, pre-assembly, kitting, installation, and project management services, as well as after-sales support that comprises warranty, credit, project-based billing, returns and maintenance, and repair and operations support. The company sells its products through a network of distribution centers, branches, counter service and specialist sales associates, showroom consultants, and e-commerce channels. Ferguson Enterprises Inc. was founded in 1953 and is headquartered in Newport News, Virginia.