Handy & Harman (NASDAQ: HNH) and Universal Stainless & Alloy Products (NASDAQ:USAP) are both small-cap basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Analyst Recommendations

This is a summary of recent ratings and price targets for Handy & Harman and Universal Stainless & Alloy Products, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Handy & Harman 0 0 0 0 N/A
Universal Stainless & Alloy Products 0 1 2 0 2.67

Universal Stainless & Alloy Products has a consensus target price of $19.00, suggesting a potential downside of 11.01%. Given Universal Stainless & Alloy Products’ higher probable upside, analysts clearly believe Universal Stainless & Alloy Products is more favorable than Handy & Harman.

Institutional & Insider Ownership

88.2% of Handy & Harman shares are held by institutional investors. Comparatively, 85.6% of Universal Stainless & Alloy Products shares are held by institutional investors. 6.1% of Handy & Harman shares are held by insiders. Comparatively, 11.6% of Universal Stainless & Alloy Products shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Handy & Harman and Universal Stainless & Alloy Products’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Handy & Harman N/A N/A N/A $0.71 42.68
Universal Stainless & Alloy Products $154.43 million 1.00 -$5.34 million ($0.26) -82.12

Handy & Harman has higher earnings, but lower revenue than Universal Stainless & Alloy Products. Universal Stainless & Alloy Products is trading at a lower price-to-earnings ratio than Handy & Harman, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Handy & Harman and Universal Stainless & Alloy Products’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Handy & Harman 5.07% 27.77% 6.04%
Universal Stainless & Alloy Products -1.08% -0.53% -0.32%

Summary

Handy & Harman beats Universal Stainless & Alloy Products on 5 of the 9 factors compared between the two stocks.

Handy & Harman Company Profile

Handy & Harman Ltd. is a holding company. The Company, through its subsidiaries, is a diversified manufacturer of engineered industrial products. The Company’s segments include Joining Materials, Tubing, Building Materials, Performance Materials, Electrical Products, and Kasco Blades and Route Repair Services (Kasco). Joining Materials fabricates precious metals and their alloys into brazing alloys. Tubing manufactures a range of steel tubing products. Building Materials manufactures and supplies products to the commercial construction and building industries. Performance Materials manufactures sheet and mechanically formed glass manufactures sheet and mechanically formed glass, quartz, carbon and aramid materials. Electrical Products segment designs, manufactures and markets power electronics and power protection, among others. Kasco provides meat-room blade products, repair services and resale products for the meat and deli departments of supermarkets and restaurants, among others.

Universal Stainless & Alloy Products Company Profile

Universal Stainless & Alloy Products, Inc. manufactures and markets semi-finished and finished specialty steel products, including stainless steel, nickel alloys, tool steel and certain other alloyed steels. The Company’s manufacturing process involves melting, remelting, heat treating, hot and cold rolling, forging, machining and cold drawing of semi-finished and finished specialty steels. The Company also performs conversion services on materials supplied by customers. The Company’s manufacturing locations include Bridgeville and Titusville, Pennsylvania; Dunkirk, New York, and North Jackson, Ohio. The Company produce a range of specialty steel grades using several manufacturing processes, including argon oxygen decarburization (AOD), electro-slag remelted (ESR), vacuum induction melting (VIM) and vacuum-arc remelted (VAR). It manufactures its products within the product lines, including Stainless Steel, High-Strength Low Alloy Steel, Tool Steel and High-Temperature Alloy Steel.

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