Critical Comparison: Kubota (OTCMKTS:KUBTY) & ESAB (NYSE:ESAB)

Kubota (OTCMKTS:KUBTY) and ESAB (NYSE:ESAB) are both industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Institutional & Insider Ownership

0.4% of Kubota shares are held by institutional investors. Comparatively, 91.1% of ESAB shares are held by institutional investors. 0.0% of Kubota shares are held by company insiders. Comparatively, 7.2% of ESAB shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Kubota has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, ESAB has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Profitability

This table compares Kubota and ESAB’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kubota	8.18%	9.12%	4.27%
ESAB	5.75%	14.48%	5.99%

Dividends

Kubota pays an annual dividend of $1.19 per share and has a dividend yield of 1.4%. ESAB pays an annual dividend of $0.48 per share and has a dividend yield of 0.7%. Kubota pays out 15.7% of its earnings in the form of a dividend. ESAB pays out 17.2% 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. ESAB has increased its dividend for 3 consecutive years. Kubota is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent recommendations for Kubota and ESAB, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kubota	2	1	0	1	2.00
ESAB	0	1	6	0	2.86

ESAB has a consensus target price of $118.67, indicating a potential upside of 78.74%. Given ESAB’s stronger consensus rating and higher possible upside, analysts clearly believe ESAB is more favorable than Kubota.

Earnings & Valuation

This table compares Kubota and ESAB”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kubota	$20.19 billion	0.93	$1.25 billion	$7.59	10.89
ESAB	$3.00 billion	1.37	$226.77 million	$2.79	23.80

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

Summary

ESAB beats Kubota on 11 of the 18 factors compared between the two stocks.

About Kubota

Kubota Corporation manufactures and sells agricultural and construction machinery in Japan, North America, Europe, Asia, and internationally. It operates through three segments: Farm & Machinery, Water & Environment, and Others. The Farm & Machinery segment offers tractors, power tillers, combine harvesters, rice transplanters, turf equipment, utility vehicles, other agricultural machinery, implements, attachments, post-harvest machinery, vegetable production equipment, intermediate management machine, and other equipment; cooperative drying, rice seedling, and gardening facilities; scales, weighing and measuring control systems, and air purifier; engines for farm equipment, construction machinery, industrial machinery, and generators; and mini excavators, wheel and skid steer loaders, compact track loaders, and other construction machinery related products. Its Water & Environment segment provides ductile iron pipes, synthetic pipes, valves, and single stack drain fittings, as well as design and construction services; reformer and cracking tubes, hearth rolls, TXAX materials, and spiral steel pipes; air-conditioning equipment; wastewater treatment equipment and plants, pumps and pump plants, membrane solutions, wastewater purification plants, night-soil treatment plants, waste incinerating and meltingplants, waste shredding and sorting plants, flue gas desulfurization apparatus, membrane methane fermentation plants, wastewater treatment plant, and valves. The Others segment offers logistics services; and roofing and exterior wall materials. It also engages in the underwriting of non-life insurance, retail financing, finance leasing, maintenance, security guarding, and facility management services; and import and export of components for farm equipment, engines, and construction machinery. It serves customers through a network of dealers. Kubota Corporation was founded in 1890 and is headquartered in Osaka, Japan.

About ESAB

ESAB Corporation engages in the formulation, development, manufacture, and supply of consumable products and equipment for use in cutting, joining, automated welding, and gas control equipment. Its comprehensive range of welding consumables includes electrodes, cored and solid wires, and fluxes using a range of specialty and other materials; and cutting consumables comprising electrodes, nozzles, shields, and tips. The company's equipment ranges from portable welding machines to large customized automated cutting and welding systems. It also offers a range of software and digital solutions to help its customers increase their productivity, remotely monitor their welding operations, and digitize their documentation. The company sells its products under the ESAB brand to various end markets, such as general industry, infrastructure, renewable energy, medical and life sciences, transportation, construction, and energy. It offers its products through independent distributors and direct salespeople. The company operates in North America, South America, Europe, the Middle East, India, Africa, and the Asia Pacific. ESAB Corporation was founded in 1904 and is headquartered in North Bethesda, Maryland.