L.B. Foster (NASDAQ: FSTR) and Nucor Corporation (NYSE:NUE) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Insider and Institutional Ownership

71.1% of L.B. Foster shares are owned by institutional investors. Comparatively, 74.9% of Nucor Corporation shares are owned by institutional investors. 15.2% of L.B. Foster shares are owned by company insiders. Comparatively, 0.7% of Nucor Corporation shares are owned 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.

Profitability

This table compares L.B. Foster and Nucor Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
L.B. Foster -9.83% -27.82% -10.07%
Nucor Corporation 6.08% 13.39% 7.20%

Volatility and Risk

L.B. Foster has a beta of 2.25, suggesting that its share price is 125% more volatile than the S&P 500. Comparatively, Nucor Corporation has a beta of 1.54, suggesting that its share price is 54% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for L.B. Foster and Nucor Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
L.B. Foster 0 0 0 0 N/A
Nucor Corporation 0 6 9 0 2.60

Nucor Corporation has a consensus target price of $67.24, indicating a potential upside of 19.83%. Given Nucor Corporation’s higher probable upside, analysts plainly believe Nucor Corporation is more favorable than L.B. Foster.

Dividends

Nucor Corporation pays an annual dividend of $1.51 per share and has a dividend yield of 2.7%. L.B. Foster does not pay a dividend. Nucor Corporation pays out 43.8% of its earnings in the form of a dividend. L.B. Foster has increased its dividend for 43 consecutive years.

Valuation & Earnings

This table compares L.B. Foster and Nucor Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
L.B. Foster $484.77 million 0.51 $23.17 million ($4.49) -5.29
Nucor Corporation $18.24 billion 0.98 $2.67 billion $3.45 16.26

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

Summary

Nucor Corporation beats L.B. Foster on 11 of the 15 factors compared between the two stocks.

L.B. Foster Company Profile

L.B. Foster Company is a manufacturer, fabricator and distributor of products and services for the rail, construction, energy and utility markets. The Company’s segments include Rail Products and Services, Construction Products, and Tubular and Energy Services. Its Rail Products segment provides a range of new and used rail, trackwork and accessories to railroads, mines and industry. The Rail segment designs and produces concrete railroad ties, insulated rail joints, power rail, track fasteners, coverboards and special accessories for mass transit and other rail systems. The Construction Products segment sells and rents steel sheet piling, H-bearing pile and other piling products for foundation and earth retention requirements. The Tubular and Energy Services segment supplies pipe coatings for natural gas pipelines and utilities, blending, injection and metering equipment for the oil and gas market, and produces threaded pipe products for industrial water well and irrigation markets.

Nucor Corporation Company Profile

Nucor Corporation (Nucor) manufactures steel and steel products. The Company produces direct reduced iron (DRI) for use in its steel mills. It operates in three segments: steel mills, steel products and raw materials. The steel mills segment produces and distributes sheet steel (hot-rolled, cold-rolled and galvanized), plate steel, structural steel (wide-flange beams, beam blanks, H-piling and sheet piling) and bar steel (blooms, billets, concrete reinforcing bar, merchant bar, wire rod and special bar quality). The steel products segment produces steel joists and joist girders, steel deck, fabricated concrete reinforcing steel and cold finished steel. The raw materials produces DRI; brokers ferrous and nonferrous metals, pig iron, HBI and DRI; supplies ferro-alloys, and processes ferrous and nonferrous scrap metal. It also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron (HBI) and DRI.

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