MSC Industrial Direct (NYSE: MSM) and Intevac (NASDAQ:IVAC) are both industrial products companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Volatility & Risk

MSC Industrial Direct has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500. Comparatively, Intevac has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Dividends

MSC Industrial Direct pays an annual dividend of $1.80 per share and has a dividend yield of 2.4%. Intevac does not pay a dividend. MSC Industrial Direct pays out 45.1% of its earnings in the form of a dividend. MSC Industrial Direct has raised its dividend for 6 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for MSC Industrial Direct and Intevac, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MSC Industrial Direct 1 10 4 0 2.20
Intevac 0 2 3 0 2.60

MSC Industrial Direct currently has a consensus price target of $89.92, suggesting a potential upside of 20.56%. Intevac has a consensus price target of $14.25, suggesting a potential upside of 73.78%. Given Intevac’s stronger consensus rating and higher probable upside, analysts plainly believe Intevac is more favorable than MSC Industrial Direct.

Valuation and Earnings

This table compares MSC Industrial Direct and Intevac’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MSC Industrial Direct $2.88 billion 1.47 $443.59 million $3.99 18.69
Intevac $112.89 million 1.58 $10.04 million $0.24 34.17

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

Insider and Institutional Ownership

75.6% of MSC Industrial Direct shares are owned by institutional investors. Comparatively, 70.1% of Intevac shares are owned by institutional investors. 31.3% of MSC Industrial Direct shares are owned by insiders. Comparatively, 13.9% of Intevac shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares MSC Industrial Direct and Intevac’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MSC Industrial Direct 8.07% 20.05% 11.38%
Intevac 4.68% 7.29% 4.98%

Summary

MSC Industrial Direct beats Intevac on 11 of the 17 factors compared between the two stocks.

MSC Industrial Direct Company Profile

MSC Industrial Direct Co., Inc. is a North American distributor of metalworking and maintenance, repair and operations (MRO) products and services. The Company’s range of MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components and electrical supplies. The Company serves a range of customers throughout the United States, Canada and the United Kingdom, from individual machine shops, to manufacturing companies, to government agencies, such as the General Services Administration and the Department of Defense. The Company also serves durable and non-durable goods manufacturing, education and healthcare markets, among others. As of September 3, 2016, the Company had operated a network of 12 customer fulfillment centers.

Intevac Company Profile

Intevac, Inc. (Intevac) is a provider of vacuum deposition equipment for a range of thin-film applications, and digital night-vision technologies and products to the defense industry. The Company’s segments include Thin-film Equipment and Photonics. The Company designs, manufactures, markets and services capital equipment used to deposit thin films and lubricants onto substrates to produce magnetic disks that are used in hard disk drives. Its thin film equipment products include 200 Lean Disk Sputtering System, 200 Lean Etch and Deposition System, AccuLuber Disk Lubrication System, INTEVAC VERTEX System, INTEVAC MATRIX Implant System, ENERGi Implant System and INTEVAC MATRIX System. The Company’s photonic segment develops, manufactures and sells compact digital-optical products for the capture and display of low-light images.

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