Comparing Graco (NYSE:GGG) and Sumitomo Heavy (OTCMKTS:SOHVY)

Sumitomo Heavy (OTCMKTS:SOHVY) and Graco (NYSE:GGG) are both industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.

Risk & Volatility

Sumitomo Heavy has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500. Comparatively, Graco has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500.

Earnings & Valuation

This table compares Sumitomo Heavy and Graco”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sumitomo Heavy	$7.14 billion	0.56	$207.28 million	$0.46	18.08
Graco	$2.24 billion	5.43	$521.84 million	$3.07	23.84

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

Profitability

This table compares Sumitomo Heavy and Graco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sumitomo Heavy	2.98%	4.87%	2.49%
Graco	22.96%	18.66%	15.22%

Dividends

Sumitomo Heavy pays an annual dividend of $0.14 per share and has a dividend yield of 1.7%. Graco pays an annual dividend of $1.18 per share and has a dividend yield of 1.6%. Sumitomo Heavy pays out 30.4% of its earnings in the form of a dividend. Graco pays out 38.4% 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. Graco has raised its dividend for 29 consecutive years. Sumitomo Heavy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

93.9% of Graco shares are held by institutional investors. 2.2% of Graco shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Sumitomo Heavy and Graco, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sumitomo Heavy	0	0	0	0	0.00
Graco	0	5	2	0	2.29

Graco has a consensus target price of $93.50, indicating a potential upside of 27.74%. Given Graco’s stronger consensus rating and higher possible upside, analysts plainly believe Graco is more favorable than Sumitomo Heavy.

Summary

Graco beats Sumitomo Heavy on 14 of the 17 factors compared between the two stocks.

About Sumitomo Heavy

Sumitomo Heavy Industries, Ltd. manufactures and sells general machinery, advanced precision machinery, construction machinery, ships, and environmental plant facilities in Japan and internationally. Its Mechatronics segment offers gearmotors, gearboxes, motion control drives, motors and inverters, drive solutions, precision positioning equipment, laser systems, control systems, motion components, and collaborative robot. The company's Industrial Machinery segment provides injection molding machines, cryocoolers, ion implanters, PET tracer production systems, vacuum coasting equipment, steel tube air forming, non-destructive inspections, clean room system, cast iron and steel rolls for hot rolling, and coolant systems. Its Logistics & Construction segment offers hydraulic excavators, crawler cranes, material handing systems, parking systems, transfer molding presses, cryopumps, proton therapy systems, forging presses, lifting magnets, spinning machines, dust collectors, surface grinding machines, extrusion coating line, road machinery, foundation machines, logistics systems, and forklifts. The company's Energy & Lifelines segment provides circulating fluidized bed (CFB) boilers, liquid air energy storage, electrostatic precipitators, evaporation and crystallization facilities, waste heat boilers, CFB scrubbers, flue gas denitrification systems, industrial wastewater treatment facilities, steam turbines, distillation technology and extractors, mixing vessels, and food and beverage manufacturing facilities. This segment also offers bubbling fluidized bed boilers, rotary kiln-type recycling facilities, ash handling systems, fluidized bed gasifiers, waste-to-energy plants baghouses, digital services, water and sewage treatment systems, process pumps, reactor vessels, coke oven machines, and oils tankers. The company provides IT solutions and security services. Sumitomo Heavy Industries, Ltd. was founded in 1888 and is headquartered in Tokyo, Japan.

About Graco

Graco Inc. designs, manufactures, and markets systems and equipment used to move, measure, control, dispense, and spray fluid and powder materials worldwide. The Contractor segment offers sprayers to apply paint to walls and other structures; two-component proportioning systems that are used to spray polyurethane foam and polyurea coatings; and viscous coatings to roofs, as well as markings on roads, parking lots, athletic fields, and floors. The Industrial segment provides liquid finishing equipment, paint circulating and supply pumps, paint circulating advanced control systems, plural component coating proportioners, and accessories and spare parts; equipment that pumps, meters, mixes and dispenses sealant, adhesive, and composite materials; and gel-coat equipment, chop and wet-out systems, resin transfer molding systems and applicators, and precision dispensing solutions. It also offers powder finishing products to coat powder finishing on metals under the Gema and SAT brands. The Process segment provides pumps to move and dispense chemicals, water, wastewater, petroleum, food, lubricants, and other fluids; pressure valves used in the oil and natural gas industry, other industrial processes, and research facilities; and chemical injection pumping solutions for injection of chemicals into producing oil wells and pipelines. It also supplies pumps, hose reels, meters, valves, and accessories for fast oil change facilities, service garages, fleet service centers, automobile dealerships, auto parts stores, truck builders, and heavy equipment service centers; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators in industrial and commercial equipment, compressors, turbines, and on- and off-road vehicles. It sells its products through distributors, original equipment manufacturers, and home center channels, as well as to end-users. The company was incorporated in 1926 and is headquartered in Minneapolis, Minnesota.