Alamo Group (NYSE:ALG) and Arcosa (NYSE:ACA) are both small-cap industrial products companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.

Profitability

This table compares Alamo Group and Arcosa’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alamo Group 6.04% 13.85% 9.19%
Arcosa N/A N/A N/A

Institutional & Insider Ownership

91.9% of Alamo Group shares are owned by institutional investors. 3.5% of Alamo Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Alamo Group and Arcosa, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alamo Group 0 0 1 0 3.00
Arcosa 0 0 2 0 3.00

Alamo Group presently has a consensus price target of $104.00, suggesting a potential upside of 33.73%. Arcosa has a consensus price target of $43.50, suggesting a potential upside of 65.21%. Given Arcosa’s higher probable upside, analysts clearly believe Arcosa is more favorable than Alamo Group.

Earnings & Valuation

This table compares Alamo Group and Arcosa’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alamo Group $912.38 million 1.00 $44.31 million $4.63 16.80
Arcosa N/A N/A N/A N/A N/A

Alamo Group has higher revenue and earnings than Arcosa.

Dividends

Alamo Group pays an annual dividend of $0.44 per share and has a dividend yield of 0.6%. Arcosa does not pay a dividend. Alamo Group pays out 9.5% of its earnings in the form of a dividend. Alamo Group has increased its dividend for 3 consecutive years.

Summary

Alamo Group beats Arcosa on 8 of the 11 factors compared between the two stocks.

About Alamo Group

Alamo Group Inc. designs, manufactures, distributes, and services agricultural and infrastructure maintenance equipment for governmental and industrial use worldwide. It operates in three segments: Industrial, Agricultural, and European. The company offers hydraulically-powered and tractor-mounted mowers, including boom-mounted mowers; cutters for heavy-duty and intensive use applications; and heavy duty tractors-and truck-mounted mowing, and vegetation maintenance equipment and parts. It also provides truck-mounted air vacuum, mechanical broom, and regenerative air sweepers; pothole patchers; leaf collection equipment and replacement brooms; parking lot sweepers; excavators; catch basin cleaners and roadway debris vacuum systems; truck-mounted vacuum trucks, combination sewer cleaners, and hydro excavators; snow removal and ice control products; snow plows and heavy duty snow removal equipment, hitches, and attachments; and public works and runway maintenance products, parts, and services. In addition, the company offers rotary and finishing mowers, flail and disc mowers, front-end loaders, backhoes, rotary tillers, posthole diggers, and scraper blades, as well as self-propelled zero turn radius mowers; cutting parts, plain and hard-faced replacement tillage tools, disc blades, and fertilizer application components; aftermarket agricultural parts; heavy-duty mechanical rotary mowers, snow blowers, and rock removal equipment; and replacement parts. Further, it provides rotary mowers and tractor attachments; agricultural implements; hydraulic and boom-mounted hedge and grass cutters, as well as other tractor attachments and implements; hedgerow cutters, industrial grass mowers, and agricultural seedbed preparation cultivators; self-propelled sprayers and multi-drive load-carrying vehicles; cutting blades; hydraulic and mechanical boom mowers; and high pressure cleaning systems and trenchers. The company was founded in 1955 and is headquartered in Seguin, Texas.

About Arcosa

Arcosa, Inc. manufactures and sells infrastructure-related products and services for the construction, energy, and transportation markets. It operates through three segments: Construction Products Group, Energy Equipment Group, and Transportation Products Group. The Construction Products Group segment offers lightweight and natural construction aggregates, and trench shields and shoring products that are used in construction landscape, including commercial, industrial, road and bridge, and underground construction. It serves concrete producers; commercial, residential, industrial, and highway contractors; manufacturers of masonry products; state and local governments; and equipment rental dealers. The Energy Equipment Group segment provides structural wind towers for wind turbine producers; steel utility structures for electricity transmission and distribution; and pressurized and non-pressurized storage and distribution containers that store and transport various products, such as propane, anhydrous ammonia, and natural gas liquids. The Transportation Products Group segment offers hopper barges, tank barges, fiberglass covers, hatches, castings, and winches for commercial marine transportation companies and industrial shippers; axles, circular forgings, and coupling devices for freight, tank, locomotive, and passenger rail transportation equipment, as well as for other industrial uses; and cast components for use in the industrial and mining sectors. The company is headquartered in Dallas, Texas.

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