Quanex Building Products Corporation (NYSE: NX) and Fortune Brands Home & Security (NYSE:FBHS) are both construction companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations for Quanex Building Products Corporation and Fortune Brands Home & Security, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quanex Building Products Corporation 0 1 2 0 2.67
Fortune Brands Home & Security 0 6 8 0 2.57

Quanex Building Products Corporation presently has a consensus price target of $24.00, suggesting a potential upside of 2.35%. Fortune Brands Home & Security has a consensus price target of $68.00, suggesting a potential upside of 3.42%. Given Fortune Brands Home & Security’s higher possible upside, analysts clearly believe Fortune Brands Home & Security is more favorable than Quanex Building Products Corporation.

Institutional and Insider Ownership

99.8% of Quanex Building Products Corporation shares are owned by institutional investors. Comparatively, 88.1% of Fortune Brands Home & Security shares are owned by institutional investors. 5.3% of Quanex Building Products Corporation shares are owned by insiders. Comparatively, 1.6% of Fortune Brands Home & Security shares are owned by 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

Quanex Building Products Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.7%. Fortune Brands Home & Security pays an annual dividend of $0.72 per share and has a dividend yield of 1.1%. Quanex Building Products Corporation pays out 42.1% of its earnings in the form of a dividend. Fortune Brands Home & Security pays out 25.4% 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. Fortune Brands Home & Security has raised its dividend for 3 consecutive years. Fortune Brands Home & Security is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Quanex Building Products Corporation has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500. Comparatively, Fortune Brands Home & Security has a beta of 1.37, meaning that its stock price is 37% more volatile than the S&P 500.

Profitability

This table compares Quanex Building Products Corporation and Fortune Brands Home & Security’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Quanex Building Products Corporation 1.52% 7.87% 3.81%
Fortune Brands Home & Security 8.61% 18.93% 8.88%

Earnings & Valuation

This table compares Quanex Building Products Corporation and Fortune Brands Home & Security’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Quanex Building Products Corporation $883.58 million 0.92 $95.14 million $0.38 61.71
Fortune Brands Home & Security $5.13 billion 1.97 $822.40 million $2.84 23.15

Fortune Brands Home & Security has higher revenue and earnings than Quanex Building Products Corporation. Fortune Brands Home & Security is trading at a lower price-to-earnings ratio than Quanex Building Products Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Fortune Brands Home & Security beats Quanex Building Products Corporation on 13 of the 17 factors compared between the two stocks.

About Quanex Building Products Corporation

Quanex Building Products Corporation manufactures components for original equipment manufacturers (OEM) in the building products industry. The Company’s components can be categorized as window and door (fenestration) components, and kitchen and bath cabinet components. The Company operates through three segments: North American Engineered Components (NA Engineered Components), which consists of four operating segments primarily focused on the fenestration market in North America manufacturing vinyl profiles, insulating glass (IG) spacers, screens and other fenestration components; European Engineered Components (EU Engineered Components), which consists of the United Kingdom-based vinyl extrusion business, manufacturing vinyl profiles and conservatories, and the European insulating glass business manufacturing IG spacers, and North American Cabinet Components (NA Cabinet Components), which consists of the North American cabinet door and components business.

About Fortune Brands Home & Security

Fortune Brands Home & Security, Inc. is a holding company. The Company operates through four segments. The Cabinets segment includes custom, semi-custom and stock cabinetry for the kitchen, bath and other parts of the home under brand names, including Aristokraft, Mid-Continent, Diamond, Kitchen Classics, Kitchen Craft, Schrock, Omega, Homecrest, Thomasville, StarMark and Ultracraft. The Plumbing segment manufactures or assembles and sells faucets, bath furnishings, accessories and kitchen sinks and waste disposals under the Moen, Riobel, ROHL, Perrin & Rowe, and Waste King brands. The Doors segment includes residential fiberglass and steel entry door systems under the Therma-Tru brand name and urethane millwork product lines under the Fypon brand name. The Security segment includes locks, safety and security devices and electronic security products under the Master Lock brand name and fire resistant safes, security containers and commercial cabinets under the SentrySafe brand name.

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