Simpson Manufacturing (NYSE:SSD) and L S Starrett (NYSE:SCX) are both construction companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, institutional ownership, earnings, profitability and dividends.

Volatility and Risk

Simpson Manufacturing has a beta of 1.74, suggesting that its stock price is 74% more volatile than the S&P 500. Comparatively, L S Starrett has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Simpson Manufacturing and L S Starrett, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Simpson Manufacturing 0 2 1 0 2.33
L S Starrett 0 0 0 0 N/A

Simpson Manufacturing presently has a consensus target price of $71.33, indicating a potential upside of 24.40%. Given Simpson Manufacturing’s higher probable upside, analysts plainly believe Simpson Manufacturing is more favorable than L S Starrett.

Profitability

This table compares Simpson Manufacturing and L S Starrett’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Simpson Manufacturing 11.88% 14.43% 12.13%
L S Starrett -2.11% -9.15% -4.27%

Dividends

Simpson Manufacturing pays an annual dividend of $0.88 per share and has a dividend yield of 1.5%. L S Starrett pays an annual dividend of $0.10 per share and has a dividend yield of 2.0%. Simpson Manufacturing pays out 44.4% of its earnings in the form of a dividend. Simpson Manufacturing has raised its dividend for 4 consecutive years.

Valuation and Earnings

This table compares Simpson Manufacturing and L S Starrett’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Simpson Manufacturing $977.03 million 2.70 $92.61 million $1.98 28.96
L S Starrett $216.33 million 0.16 -$3.63 million N/A N/A

Simpson Manufacturing has higher revenue and earnings than L S Starrett.

Institutional & Insider Ownership

88.8% of Simpson Manufacturing shares are held by institutional investors. Comparatively, 41.7% of L S Starrett shares are held by institutional investors. 0.4% of Simpson Manufacturing shares are held by company insiders. Comparatively, 2.1% of L S Starrett shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Simpson Manufacturing beats L S Starrett on 11 of the 14 factors compared between the two stocks.

Simpson Manufacturing Company Profile

Simpson Manufacturing Co., Inc., through its subsidiaries, designs, engineers, manufactures, and sells building construction products. The company offers wood construction products, including connectors, truss plates, fastening systems, fasteners, and pre-fabricated lateral systems used in light-frame construction; and concrete construction products comprising adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools, and fiber reinforced materials for use in concrete, masonry, and steel construction, as well as for concrete repair, protection, and strengthening applications. It also provides connectors for wood framing and cold formed steel applications; screws, tools, and products for deck, fascia, and drywall applications; mechanical anchors and epoxy adhesives; fiber reinforced cementitious mortar products; and decorative hardware and connectors for outdoor living spaces. The company markets its products to the residential construction, light industrial and commercial construction, remodeling, and do-it-yourself markets in the United States, Canada, France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands, Belgium, Sweden, Norway, Australia, New Zealand, South Africa, China, Taiwan, and Vietnam, as well as in Mexico, Chile, and the Middle East. Simpson Manufacturing Co., Inc. was founded in 1956 and is headquartered in Pleasanton, California.

L S Starrett Company Profile

The L.S. Starrett Company, together with its subsidiaries, manufactures and sells industrial, professional, and consumer measuring and cutting tools, and related products primarily in North America, Brazil, China, the United Kingdom, Australia, and New Zealand. The company's products include precision tools, electronic gages, gage blocks, optical vision and laser measuring equipment, custom engineered granite solutions, squares, band saw blades, hole saws, hacksaw blades, jig saw blades, and reciprocating saw blades, as well as M1 lubricant and precision ground flat stock products. It also provides measuring tools, such as micrometers, vernier calipers, height gages, depth gages, dial indicators, steel rules, and combination squares, as well as custom, non-contact, and in-process gaging products; and force measurement and material test equipment. In addition, the company offers material test systems comprising hardware and software; manual and automated field of view measurement systems; and hand tools for measuring, marking, and layout that include tapes, levels, chalk lines, and other products for building trades, and construction and retail trades. Further, it provides carbide tipped products for cutting ferrous materials, and non-ferrous metals and castings. The company primarily distributes its precision hand tools, and saw and construction products through distributors or resellers. It serves the metalworking, aerospace, and automotive markets; marine and farm equipment shops, and do-it-yourselfers; and tradesmen, which comprise builders, carpenters, plumbers, and electricians. The L.S. Starrett Company was founded in 1880 and is headquartered in Athol, Massachusetts.

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