Contrasting Eastern (NASDAQ:EML) and Allegion (NYSE:ALLE)

Eastern (NASDAQ:EML) and Allegion (NYSE:ALLE) are both industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, risk, profitability and valuation.

Earnings & Valuation

This table compares Eastern and Allegion”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eastern	$248.97 million	0.52	$7.13 million	$0.96	22.57
Allegion	$4.07 billion	2.74	$643.80 million	$7.32	17.73

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

Profitability

This table compares Eastern and Allegion’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eastern	2.41%	5.46%	3.08%
Allegion	15.24%	35.41%	13.53%

Risk and Volatility

Eastern has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500. Comparatively, Allegion has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500.

Dividends

Eastern pays an annual dividend of $0.44 per share and has a dividend yield of 2.0%. Allegion pays an annual dividend of $2.20 per share and has a dividend yield of 1.7%. Eastern pays out 45.8% of its earnings in the form of a dividend. Allegion pays out 30.1% 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. Allegion has increased its dividend for 11 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and target prices for Eastern and Allegion, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eastern	0	2	0	0	2.00
Allegion	0	9	1	1	2.27

Allegion has a consensus price target of $160.38, suggesting a potential upside of 23.55%. Given Allegion’s stronger consensus rating and higher possible upside, analysts clearly believe Allegion is more favorable than Eastern.

Institutional & Insider Ownership

77.0% of Eastern shares are owned by institutional investors. Comparatively, 92.2% of Allegion shares are owned by institutional investors. 18.4% of Eastern shares are owned by insiders. Comparatively, 0.6% of Allegion shares are owned 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.

Summary

Allegion beats Eastern on 14 of the 18 factors compared between the two stocks.

About Eastern

The Eastern Company designs, manufactures, and sells engineered solutions to industrial markets in the United States and internationally. The company offers turnkey returnable packaging solutions, which are used in the assembly processes of vehicles, aircraft, and durable goods, as well as in production processes of plastic packaging products, packaged consumer goods, and pharmaceuticals; designs and manufactures blow mold tools and injection blow mold tooling products, and 2-step stretch blow molds and related components for the stretch blow molding industry; and supplies blow molds and change parts to the food, beverage, healthcare, and chemical industries. It also provides rotary latches, compression latches, draw latches, hinges, camlocks, key switches, padlocks, and handles; and development and program management services for custom electromechanical and mechanical systems for original equipment manufacturers (OEMs) and customer applications. In addition, the company designs and manufactures proprietary vision technology for OEMs and aftermarket applications, as well as offers aftermarket components to the heavy- and medium-duty truck, motorhome, and bus markets. The Eastern Company was founded in 1858 and is based in Shelton, Connecticut.

About Allegion

Allegion plc manufactures and sells mechanical and electronic security products and solutions worldwide. The company offers door controls and systems and exit devices; locks, locksets, portable locks, and key systems and services; electronic security products and access control systems; time, attendance, and workforce productivity systems; doors, accessories, and other. It also provides services and software, which includes inspection, maintenance, and repair services for its automatic entrance solutions; and software as a service, including access control, IoT integration, and workforce management solutions, as well as aftermarket services, design and installation offerings, and locksmith services. The company sells its products and solutions to end-users in commercial, institutional, and residential facilities, including education, healthcare, government, hospitality, retail, commercial office, and single and multi-family residential markets under the CISA, Interflex, LCN, Schlage, SimonsVoss, and Von Duprin brands. It sells its products and solutions through distribution and retail channels, such as specialty distribution, e-commerce, and wholesalers, as well as through various retail channels comprising do-it-yourself home improvement centers, online and e-commerce platforms, and small specialty showroom outlets. Allegion plc was incorporated in 2013 and is headquartered in Dublin, Ireland.