Schnitzer Steel Industries (NASDAQ: SCHN) and MRC Global (NYSE:MRC) are both small-cap basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, dividends, profitability, risk and valuation.

Analyst Recommendations

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This is a summary of recent ratings and price targets for Schnitzer Steel Industries and MRC Global, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Schnitzer Steel Industries 0 3 1 0 2.25
MRC Global 0 3 7 0 2.70

Schnitzer Steel Industries currently has a consensus target price of $32.33, indicating a potential downside of 4.34%. MRC Global has a consensus target price of $20.56, indicating a potential upside of 20.00%. Given MRC Global’s stronger consensus rating and higher possible upside, analysts clearly believe MRC Global is more favorable than Schnitzer Steel Industries.

Risk and Volatility

Schnitzer Steel Industries has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500. Comparatively, MRC Global has a beta of 1.56, suggesting that its stock price is 56% more volatile than the S&P 500.

Valuation and Earnings

This table compares Schnitzer Steel Industries and MRC Global’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Schnitzer Steel Industries $1.69 billion 0.54 $44.51 million $2.28 14.82
MRC Global $3.65 billion 0.43 $50.00 million $0.27 63.44

MRC Global has higher revenue and earnings than Schnitzer Steel Industries. Schnitzer Steel Industries is trading at a lower price-to-earnings ratio than MRC Global, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Schnitzer Steel Industries and MRC Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Schnitzer Steel Industries 3.50% 11.90% 6.67%
MRC Global 1.37% 3.54% 1.18%

Dividends

Schnitzer Steel Industries pays an annual dividend of $0.75 per share and has a dividend yield of 2.2%. MRC Global does not pay a dividend. Schnitzer Steel Industries pays out 32.9% of its earnings in the form of a dividend.

Insider and Institutional Ownership

91.0% of Schnitzer Steel Industries shares are owned by institutional investors. Comparatively, 98.4% of MRC Global shares are owned by institutional investors. 3.5% of Schnitzer Steel Industries shares are owned by insiders. Comparatively, 6.3% of MRC Global shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

MRC Global beats Schnitzer Steel Industries on 10 of the 16 factors compared between the two stocks.

Schnitzer Steel Industries Company Profile

Schnitzer Steel Industries, Inc. is a recycler of ferrous and nonferrous scrap metal, including end-of-life vehicles, and a manufacturer of finished steel products. The Company operates through two segments: the Auto and Metals Recycling (AMR) business and the Steel Manufacturing Business (SMB). The AMR segment collects and recycles auto bodies, rail cars, home appliances, industrial machinery, manufacturing scrap and construction and demolition scrap from bridges, buildings and other infrastructure. AMR’s primary products include recycled ferrous and nonferrous scrap metal. The SMB segment produces finished steel products such as rebar, wire rod, coiled rebar, merchant bar and other specialty products using 100% recycled metal sourced from AMR. SMB’s products are primarily used in nonresidential and infrastructure construction in North America. SMB operates a steel mini-mill in McMinnville, Oregon that produces finished steel products using recycled metal and other raw materials.

MRC Global Company Profile

MRC Global Inc. is an industrial distributor of pipe, valves and fittings and related products and services to the energy industry. The Company’s segments include the U.S., Canada and International. Its U.S. segment includes the United States Eastern Region and Gulf Coast, and the United States Western Region. It provides services, such as product testing, manufacturer assessments, daily deliveries, volume purchasing, inventory and zone store management and warehousing, technical support, training, just-in-time delivery, truck stocking, order consolidation, product tagging and system interfaces customized to customer and supplier specifications for tracking and replenishing inventory, engineering of control packages, and valve inspection and repair. The Company’s principal product types include valves, automation, measurement and instrumentation; carbon steel fittings and flanges; stainless steel and alloy fittings, flanges and pipe; gas products; line pipe, and other.

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