Head-To-Head Contrast: Kennametal (NYSE:KMT) & Snap-On (NYSE:SNA)

Snap-On (NYSE:SNA) and Kennametal (NYSE:KMT) are both industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.

Profitability

This table compares Snap-On and Kennametal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Snap-On	20.82%	16.77%	11.82%
Kennametal	22.49%	38.40%	19.36%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Snap-On and Kennametal, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Snap-On	0	1	4	0	2.80
Kennametal	4	5	0	0	1.56

Snap-On presently has a consensus price target of $434.00, suggesting a potential upside of 16.68%. Kennametal has a consensus price target of $33.07, suggesting a potential upside of 33.40%. Given Kennametal’s higher possible upside, analysts plainly believe Kennametal is more favorable than Snap-On.

Risk & Volatility

Snap-On has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, Kennametal has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500.

Valuation and Earnings

This table compares Snap-On and Kennametal”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Snap-On	$4.74 billion	4.04	$1.02 billion	$19.23	19.34
Kennametal	$2.63 billion	0.73	$342.39 million	$7.58	3.27

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

Dividends

Snap-On pays an annual dividend of $9.76 per share and has a dividend yield of 2.6%. Kennametal pays an annual dividend of $0.80 per share and has a dividend yield of 3.2%. Snap-On pays out 50.8% of its earnings in the form of a dividend. Kennametal pays out 10.6% 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. Snap-On has raised its dividend for 15 consecutive years. Kennametal is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

84.9% of Snap-On shares are held by institutional investors. 3.8% of Snap-On shares are held by company insiders. Comparatively, 1.7% of Kennametal shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Snap-On beats Kennametal on 10 of the 17 factors compared between the two stocks.

About Snap-On

Snap-on Incorporated develops, manufactures and markets tools, equipment, diagnostics and information systems for professional users. Its offerings include hand and power tools, tool storage, vehicle diagnostic equipment, shop equipment, repair information and software, and related products and services. The company serves customers in vehicle repair and other industries, including aviation, aerospace, agriculture, construction and manufacturing. Its products and services reach customers in the United States and international markets.

About Kennametal

Kennametal Inc. is an industrial technology company that develops and manufactures metal-cutting tools, tooling systems, and wear-resistant products. Its products use materials such as tungsten carbide and advanced ceramics to help customers machine components and protect equipment used in demanding operating conditions. The company serves industries including aerospace, transportation, energy, general engineering, and earthworks. Its products and services include cutting tools and related tooling, engineered components, and wear solutions for industrial applications.