Critical Analysis: IDEX (NYSE:IEX) and Japan Steel Works (OTCMKTS:JPSWY)

IDEX (NYSE:IEX) and Japan Steel Works (OTCMKTS:JPSWY) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Risk and Volatility

IDEX has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500. Comparatively, Japan Steel Works has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Institutional & Insider Ownership

98.0% of IDEX shares are held by institutional investors. 0.5% of IDEX shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares IDEX and Japan Steel Works’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
IDEX	13.97%	15.20%	8.73%
Japan Steel Works	6.95%	9.76%	4.84%

Dividends

IDEX pays an annual dividend of $2.84 per share and has a dividend yield of 1.7%. Japan Steel Works pays an annual dividend of $0.22 per share and has a dividend yield of 0.7%. IDEX pays out 44.9% of its earnings in the form of a dividend. Japan Steel Works pays out 25.9% 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. IDEX has increased its dividend for 16 consecutive years. IDEX is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for IDEX and Japan Steel Works, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
IDEX	0	2	4	0	2.67
Japan Steel Works	0	1	1	0	2.50

IDEX presently has a consensus target price of $198.86, indicating a potential upside of 18.34%. Given IDEX’s stronger consensus rating and higher possible upside, analysts plainly believe IDEX is more favorable than Japan Steel Works.

Earnings and Valuation

This table compares IDEX and Japan Steel Works”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
IDEX	$3.42 billion	3.68	$505.00 million	$6.32	26.59
Japan Steel Works	$1.63 billion	3.03	$118.54 million	$0.85	39.08

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

Summary

IDEX beats Japan Steel Works on 15 of the 17 factors compared between the two stocks.

About IDEX

IDEX Corporation, together with its subsidiaries, provides applied solutions worldwide. The company operates through three segments: Fluid & Metering Technologies (FMT), Health & Science Technologies (HST), and Fire & Safety/Diversified Products (FSDP). The FMT segment designs, produces, and distributes positive displacement pumps, valves, small volume provers, flow meters, injectors, and other fluid-handling pump modules and systems, as well as flow monitoring and other services for the food, chemical, general industrial, water and wastewater, agricultural, and energy industries. The HST segment designs, produces, and distributes precision fluidics positive displacement pumps, powder and liquid processing technologies, drying systems, micro-precision components, pneumatic components and sealing solutions, high performance molded and extruded sealing components, custom mechanical and shaft seals, engineered hygienic mixers and valves, biocompatible medical devices and implantables, air compressors and blowers, optical components and coatings, laboratory and commercial equipment, and precision photonic solutions. This segment serves food and beverage, life sciences, analytical instruments, pharmaceutical and biopharmaceutical, industrial, semiconductor, automotive/transportation, medical/dental, energy, cosmetics, marine, chemical, wastewater and water treatment, research and aerospace/defense markets. The FSDP segment designs, produces, and distributes firefighting pumps, valves and controls, rescue tools, lifting bags, and other components and systems for the fire and rescue industry; engineered stainless steel banding and clamping devices for various industrial and commercial applications; and precision equipment for dispensing, metering, and mixing colorants and paints used in retail and commercial businesses. IDEX Corporation was incorporated in 1987 and is headquartered in Northbrook, Illinois.

About Japan Steel Works

The Japan Steel Works, Ltd. engages in the provision of industrial machinery products, and material and engineering business in Japan and internationally. It operates through Industrial Machinery Products Business, and Material and Engineering Business segments. The Industrial Machinery Products Business segment offers plastic production and processing machinery, such as pelletizers, film and sheet manufacturing equipment, and twin-screw extruders; molding machines including plastic injection molding, magnesium injection molding, and blow molding machines; and other machinery consists of excimer laser annealing systems, defense equipment, railway products, hot press devices, vacuum laminators, and deposit systems, as well as after-sales services for plastics, mobility, high-performance batteries, electronic devices, and defense applications. The Material and Engineering Business segment provides steel casting and forgings, such as reactor and steam generator parts, rotor shafts, turbine casings, die steel, steel rolls for steel manufacturing, and clad steel plates; and engineering and other services, including design and analysis, welded structures, inspection and survey, and hydrogen pressure accumulators and related products for use in power generation equipment, renewable energy, and infrastructure applications. The company offers photonics, composite materials, and metallic materials for use in semiconductors and electronic devices, cameras and sensing devices, aircraft and mobility components, and electronic parts. The Japan Steel Works, Ltd. was founded in 1907 and is headquartered in Shinagawa, Japan.