Gates Industrial (NYSE: GTES) and Twin Disc (NASDAQ:TWIN) are both construction companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, institutional ownership, profitability, valuation, analyst recommendations, risk and earnings.

Earnings & Valuation

This table compares Gates Industrial and Twin Disc’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gates Industrial $3.04 billion 1.42 $151.30 million $0.82 18.59
Twin Disc $168.18 million 1.96 -$6.29 million ($0.41) -69.71

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

Institutional and Insider Ownership

3.2% of Gates Industrial shares are owned by institutional investors. Comparatively, 49.4% of Twin Disc shares are owned by institutional investors. 27.5% of Twin Disc shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Gates Industrial and Twin Disc, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gates Industrial 0 2 6 0 2.75
Twin Disc 0 2 0 0 2.00

Gates Industrial presently has a consensus price target of $22.00, indicating a potential upside of 44.36%. Twin Disc has a consensus price target of $26.00, indicating a potential downside of 9.03%. Given Gates Industrial’s stronger consensus rating and higher probable upside, equities analysts plainly believe Gates Industrial is more favorable than Twin Disc.

Profitability

This table compares Gates Industrial and Twin Disc’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gates Industrial N/A N/A N/A
Twin Disc 2.15% 7.53% 4.49%

Summary

Gates Industrial beats Twin Disc on 7 of the 13 factors compared between the two stocks.

About Gates Industrial

Gates Industrial Corporation PLC designs and manufactures power transmission equipment. Its products serves harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners and virtually every form of transportation.

About Twin Disc

Twin Disc, Incorporated designs, manufactures, and sells marine and heavy duty off-highway power transmission equipment worldwide. The company operates through two segments, Manufacturing and Distribution. It offers marine transmissions, surface drives, propellers, and boat management systems; and power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and controls systems. The company also provides non-twin disc manufactured products. It serves customers primarily in the commercial, pleasure craft, and military marine markets, as well as in the energy and natural resources, government, and industrial markets through a direct sales force and distributor network. Twin Disc, Incorporated was founded in 1918 and is headquartered in Racine, Wisconsin.

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