Carpenter Technology (NYSE: CRS) and United States Steel (NYSE:X) are both mid-cap basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, dividends, earnings, profitability, analyst recommendations, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Carpenter Technology and United States Steel, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Carpenter Technology 0 3 3 0 2.50
United States Steel 2 7 8 0 2.35

Carpenter Technology presently has a consensus target price of $46.60, indicating a potential downside of 11.81%. United States Steel has a consensus target price of $29.06, indicating a potential downside of 13.06%. Given Carpenter Technology’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Carpenter Technology is more favorable than United States Steel.

Risk & Volatility

Carpenter Technology has a beta of 2.07, suggesting that its share price is 107% more volatile than the S&P 500. Comparatively, United States Steel has a beta of 3, suggesting that its share price is 200% more volatile than the S&P 500.

Insider and Institutional Ownership

96.0% of Carpenter Technology shares are held by institutional investors. Comparatively, 64.3% of United States Steel shares are held by institutional investors. 4.5% of Carpenter Technology shares are held by company insiders. Comparatively, 1.0% of United States Steel shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Carpenter Technology pays an annual dividend of $0.72 per share and has a dividend yield of 1.4%. United States Steel pays an annual dividend of $0.20 per share and has a dividend yield of 0.6%. Carpenter Technology pays out 44.4% of its earnings in the form of a dividend. United States Steel pays out 29.9% 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.

Profitability

This table compares Carpenter Technology and United States Steel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Carpenter Technology 4.06% 6.67% 2.77%
United States Steel 1.05% 10.27% 2.67%

Valuation and Earnings

This table compares Carpenter Technology and United States Steel’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Carpenter Technology $1.80 billion 1.38 $47.00 million $1.62 32.62
United States Steel $10.26 billion 0.57 -$440.00 million $0.67 49.90

Carpenter Technology has higher earnings, but lower revenue than United States Steel. Carpenter Technology is trading at a lower price-to-earnings ratio than United States Steel, indicating that it is currently the more affordable of the two stocks.

Summary

Carpenter Technology beats United States Steel on 11 of the 16 factors compared between the two stocks.

Carpenter Technology Company Profile

Carpenter Technology Corporation is engaged in the manufacturing, fabrication and distribution of specialty metals. The Company’s segments include Specialty Alloys Operations (SAO) and Performance Engineered Products (PEP). Its SAO segment consists of alloy and stainless steel manufacturing operations. Its PEP segment includes the Dynamet titanium business, the Carpenter Powder Products business, the Amega West business, the Specialty Steel Supply business and the Latrobe and Mexico distribution businesses. It develops, manufactures and distributes cast/wrought and powder metal stainless steels, and special alloys, including high temperature (iron-nickel-cobalt base), stainless, corrosion resistant, controlled expansion alloys, ultra-high strength and implantable alloys, tool and die steels and other specialty metals, as well as cast/wrought titanium alloys. The Company manufactures and rents down-hole drilling tools and components used in the oil and gas industry.

United States Steel Company Profile

United States Steel Corporation is an integrated steel producer. The Company is engaged in producing flat-rolled and tubular products with production operations in North America and Europe. The Company operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE) and Tubular Products (Tubular). The Flat-Rolled segment includes the operating results of its integrated steel plants and equity investees in the United States involved in the production of slabs, rounds, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States. The USSE segment includes the operating results of U. S. Steel Kosice (USSK) and its integrated steel plant and coke production facilities in Slovakia. The Tubular segment includes the operating results of its tubular production facilities, primarily in the United States and equity investees in the United States and Brazil.

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