Head-To-Head Analysis: Mesabi Trust (NYSE:MSB) and Nucor (NYSE:NUE)

Mesabi Trust (NYSE:MSB) and Nucor (NYSE:NUE) are both materials companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Mesabi Trust and Nucor, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mesabi Trust	0	1	0	0	2.00
Nucor	0	3	13	0	2.81

Nucor has a consensus target price of $274.38, suggesting a potential upside of 7.78%. Given Nucor’s stronger consensus rating and higher probable upside, analysts clearly believe Nucor is more favorable than Mesabi Trust.

Profitability

This table compares Mesabi Trust and Nucor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mesabi Trust	75.32%	54.83%	46.67%
Nucor	7.99%	12.73%	8.03%

Dividends

Mesabi Trust pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Nucor pays an annual dividend of $2.24 per share and has a dividend yield of 0.9%. Mesabi Trust pays out 23.3% of its earnings in the form of a dividend. Nucor pays out 17.9% 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. Nucor has increased its dividend for 52 consecutive years.

Risk & Volatility

Mesabi Trust has a beta of 0.34, meaning that its stock price is 66% less volatile than the S&P 500. Comparatively, Nucor has a beta of 1.87, meaning that its stock price is 87% more volatile than the S&P 500.

Insider & Institutional Ownership

76.5% of Nucor shares are owned by institutional investors. 0.3% of Mesabi Trust shares are owned by insiders. Comparatively, 0.6% of Nucor shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Mesabi Trust and Nucor”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mesabi Trust	$17.52 million	16.99	$13.87 million	$0.86	26.37
Nucor	$32.49 billion	1.78	$1.74 billion	$12.54	20.30

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

Summary

Nucor beats Mesabi Trust on 11 of the 17 factors compared between the two stocks.

About Mesabi Trust

Mesabi Trust, a royalty trust, engages in iron ore mining business in the United States. Mesabi Trust was founded in 1961 and is based in New York, New York.

About Nucor

Nucor Corporation engages in manufacture and sale of steel and steel products. It operates in three segments: steel mills, steel products, and raw materials. The Steel Mills segment produces hot-rolled, cold-rolled, and galvanized sheet steel products; plate steel products; wide-flange beams, beam blanks, and H-piling and sheet piling structural steel products; bar steel products, such as blooms, billets, concrete reinforcing and merchant bars, and engineered special bar quality products; and engages in the steel trading and rebar distribution businesses. This segment sells its products to steel service centers, fabricators, and manufacturers in the United States, Canada, and Mexico. The Steel Products segment offers steel joists and joist girders, steel decks, and galvanized torque tubes for used in solar arrays, hollow structural section steel tubing, electrical conduit, fabricated concrete reinforcing steel, cold finished steel, steel fasteners, steel grating and expanded metal, wire and wire mesh, metal building systems, insulated metal panels, steel racking, overhead doors, and utility towers and structures for communications and energy transmission. This segment is also involved in the piling distribution business. The Raw Materials segment produces direct reduced iron (DRI); brokers ferrous and nonferrous metals, pig iron, hot briquetted iron, and DRI; supplies ferro-alloys; processes ferrous and nonferrous scrap metal; and engages in the natural gas production and industrial gas business. This segment sells its ferrous scrap to electric arc furnace steel mills and foundries for manufacturing process; and nonferrous scrap metal to aluminum can producers, secondary aluminum smelters, steel mills and other processors, and consumers of various nonferrous metals. It markets its products through in-house sales force; and internal distribution and trading companies. Nucor Corporation was founded in 1905 and is headquartered in Charlotte, North Carolina.