Comparing Commercial Metals (NYSE:CMC) & Salzgitter (OTCMKTS:SZGPY)

Commercial Metals (NYSE:CMC) and Salzgitter (OTCMKTS:SZGPY) are both mid-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.

Earnings and Valuation

This table compares Commercial Metals and Salzgitter”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Commercial Metals	$8.01 billion	1.10	$84.66 million	$3.88	20.52
Salzgitter	$10.83 billion	0.31	-$381.12 million	($0.40)	-15.28

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

Insider and Institutional Ownership

86.9% of Commercial Metals shares are held by institutional investors. 0.6% of Commercial Metals shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Commercial Metals and Salzgitter’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Commercial Metals	5.46%	11.43%	6.31%
Salzgitter	-2.09%	-4.31%	-1.83%

Analyst Ratings

This is a breakdown of recent recommendations for Commercial Metals and Salzgitter, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Commercial Metals	0	4	8	0	2.67
Salzgitter	1	4	3	1	2.44

Commercial Metals presently has a consensus price target of $72.70, suggesting a potential downside of 8.68%. Given Commercial Metals’ stronger consensus rating and higher possible upside, equities analysts plainly believe Commercial Metals is more favorable than Salzgitter.

Dividends

Commercial Metals pays an annual dividend of $0.72 per share and has a dividend yield of 0.9%. Salzgitter pays an annual dividend of $0.01 per share and has a dividend yield of 0.2%. Commercial Metals pays out 18.6% of its earnings in the form of a dividend. Salzgitter pays out -2.5% 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. Commercial Metals has raised its dividend for 4 consecutive years. Commercial Metals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Commercial Metals has a beta of 1.49, suggesting that its stock price is 49% more volatile than the S&P 500. Comparatively, Salzgitter has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500.

Summary

Commercial Metals beats Salzgitter on 15 of the 18 factors compared between the two stocks.

About Commercial Metals

Commercial Metals Company manufactures, recycles, and fabricates steel and metal products, and related materials and services in the United States, Poland, China, and internationally. It operates through two segments, North America and Europe. The company processes and sells ferrous and nonferrous scrap metals to steel mills and foundries, aluminum sheet and ingot manufacturers, brass and bronze ingot makers, copper refineries and mills, secondary lead smelters, specialty steel mills, high temperature alloy manufacturers, and other consumers. It also manufactures and sells finished long steel products, including reinforcing bar, merchant bar, light structural, and other special sections, as well as semi-finished billets for rerolling and forging applications. In addition, the company provides fabricated rebar used to reinforce concrete primarily in the construction of commercial and non-commercial buildings, hospitals, convention centers, industrial plants, power plants, highways, bridges, arenas, stadiums, and dams; sells and rents construction-related products and equipment to concrete installers and other businesses; and manufactures and sells strength bars for the truck trailer industry, special bar steels for the energy market, and armor plates for military vehicles. Further, it manufactures rebars, merchant bars, and wire rods; and sells fabricated rebars, wire meshes, fabricated meshes, assembled rebar cages, and other fabricated rebar by-products to fabricators, manufacturers, distributors, and construction companies. The company was founded in 1915 and is headquartered in Irving, Texas.

About Salzgitter

Salzgitter AG, together with its subsidiaries, engages in steel and technology businesses worldwide. It operates through four segments: Steel Production, Steel Processing, Trading, and Technology. The Steel Production segment manufactures steel and special steels, such as hot-rolled wide strip, steel sheet, sections, tailored blanks, as well as scrap trading. The Steel Processing segment produces various high-grade heavy plates; and manufactures line pipes, HFI-welded tubes, and precision and stainless-steel tubes. The Trading segment operates a European sales network, as well as trading companies and agencies worldwide. The Technology segment engages in the provision of machinery and plants for the filling and packaging of beverages, as well as special machinery engineering for shoe manufacturing and elastomer production. The company also provides IT, facility management, logistics, automotive engineering, and research and development services, as well as supplies raw materials. The company was founded in 1858 and is headquartered in Salzgitter, Germany.