Graco (NYSE:GGG) vs. Fanuc (OTCMKTS:FANUY) Critical Contrast

Graco (NYSE:GGG) and Fanuc (OTCMKTS:FANUY) are both large-cap industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, earnings, risk and analyst recommendations.

Institutional & Insider Ownership

93.9% of Graco shares are held by institutional investors. Comparatively, 1.5% of Fanuc shares are held by institutional investors. 2.2% of Graco shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Graco and Fanuc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Graco	23.53%	19.54%	15.86%
Fanuc	20.11%	9.60%	8.65%

Dividends

Graco pays an annual dividend of $1.18 per share and has a dividend yield of 1.5%. Fanuc pays an annual dividend of $0.21 per share and has a dividend yield of 1.1%. Graco pays out 37.1% of its earnings in the form of a dividend. Fanuc pays out 33.9% 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. Graco has increased its dividend for 29 consecutive years. Graco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Graco has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500. Comparatively, Fanuc has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Graco and Fanuc, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Graco	0	5	2	0	2.29
Fanuc	0	2	0	1	2.67

Graco presently has a consensus price target of $95.00, indicating a potential upside of 21.90%. Given Graco’s higher possible upside, equities research analysts plainly believe Graco is more favorable than Fanuc.

Earnings and Valuation

This table compares Graco and Fanuc”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Graco	$2.24 billion	5.64	$521.84 million	$3.18	24.51
Fanuc	$5.70 billion	6.62	$1.10 billion	$0.62	30.95

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

Summary

Graco beats Fanuc on 10 of the 18 factors compared between the two stocks.

About Graco

Graco Inc. designs, manufactures, and markets systems and equipment used to move, measure, control, dispense, and spray fluid and powder materials worldwide. The Contractor segment offers sprayers to apply paint to walls and other structures; two-component proportioning systems that are used to spray polyurethane foam and polyurea coatings; and viscous coatings to roofs, as well as markings on roads, parking lots, athletic fields, and floors. The Industrial segment provides liquid finishing equipment, paint circulating and supply pumps, paint circulating advanced control systems, plural component coating proportioners, and accessories and spare parts; equipment that pumps, meters, mixes and dispenses sealant, adhesive, and composite materials; and gel-coat equipment, chop and wet-out systems, resin transfer molding systems and applicators, and precision dispensing solutions. It also offers powder finishing products to coat powder finishing on metals under the Gema and SAT brands. The Process segment provides pumps to move and dispense chemicals, water, wastewater, petroleum, food, lubricants, and other fluids; pressure valves used in the oil and natural gas industry, other industrial processes, and research facilities; and chemical injection pumping solutions for injection of chemicals into producing oil wells and pipelines. It also supplies pumps, hose reels, meters, valves, and accessories for fast oil change facilities, service garages, fleet service centers, automobile dealerships, auto parts stores, truck builders, and heavy equipment service centers; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators in industrial and commercial equipment, compressors, turbines, and on- and off-road vehicles. It sells its products through distributors, original equipment manufacturers, and home center channels, as well as to end-users. The company was incorporated in 1926 and is headquartered in Minneapolis, Minnesota.

About Fanuc

FANUC Corporation provides factory automation products in Japan, the Americas, Europe, China, the rest of Asia, and internationally. The company offers CNC series products, servo motors, lasers, robots, compact machining centers, electric injection molding machines, wire electrical discharge machines, and ultra-precision machines. It also provides FANUC intelligent edge link and drive system, an open platform for the manufacturing industry. FANUC Corporation was incorporated in 1950 and is headquartered in Yamanashi, Japan.