Critical Contrast: Friedman Industries (NASDAQ:FRD) vs. AB SKF (OTCMKTS:SKFRY)

Friedman Industries (NASDAQ:FRD) and AB SKF (OTCMKTS:SKFRY) are both industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Profitability

This table compares Friedman Industries and AB SKF’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Friedman Industries	1.84%	6.50%	3.95%
AB SKF	5.07%	14.37%	7.37%

Risk & Volatility

Friedman Industries has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500. Comparatively, AB SKF has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Valuation & Earnings

This table compares Friedman Industries and AB SKF”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Friedman Industries	$510.45 million	0.28	$6.09 million	$1.62	12.52
AB SKF	$9.34 billion	1.28	$612.44 million	$1.04	25.23

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

Analyst Recommendations

This is a breakdown of recent ratings for Friedman Industries and AB SKF, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Friedman Industries	0	0	1	0	3.00
AB SKF	0	2	1	0	2.33

Insider and Institutional Ownership

33.3% of Friedman Industries shares are held by institutional investors. Comparatively, 0.1% of AB SKF shares are held by institutional investors. 5.5% of Friedman Industries shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Friedman Industries pays an annual dividend of $0.16 per share and has a dividend yield of 0.8%. AB SKF pays an annual dividend of $0.72 per share and has a dividend yield of 2.7%. Friedman Industries pays out 9.9% of its earnings in the form of a dividend. AB SKF pays out 69.2% 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. Friedman Industries has raised its dividend for 1 consecutive years.

Summary

AB SKF beats Friedman Industries on 8 of the 15 factors compared between the two stocks.

About Friedman Industries

Friedman Industries, Incorporated engages in steel processing, pipe manufacturing and processing, and the steel and pipe distribution businesses the United States. It operates in two segments, Coil and Tubular. The Coil segment is involved in the conversion of steel coils into flat sheet and plate steel cut to customer specifications and reselling steel coils. This segment also processes customer-owned coils on a fee basis. The company sells coil products and processing services to approximately 200 customers located primarily in the midwestern, southwestern and southeastern regions of the United States. Its principal customers for these products and services are steel distributors and customers manufacturing steel products, such as steel buildings, railroad cars, barges, tanks and containers, trailers, component parts and other fabricated steel products. The Tubular segment manufactures line and oil country pipes, as well as pipes for structural applications. This segment sells its tubular products principally to steel and pipe distributors through its own sales force. The company was incorporated in 1965 and is headquartered in Longview, Texas.

About AB SKF

AB SKF (publ) designs, manufactures, and sells bearings and units, seals, lubrication systems, condition monitoring, and services worldwide. It operates in two segments, Industrial and Automotive. The company offers rolling, mounted and housings, super-precision, slewing, plain, magnetic, and thin section bearings; industrial and automotive seals; lubricants, manual lubrication tools, lubricators, automatic lubrication systems, and lubrication system components; maintenance products, such as hydraulic, mechanical, and alignment tools, as well as heaters; belts, pulleys, chains, sprockets, bushings and hubs, couplings, and bolts and tightening systems; condition monitoring systems; test and measuring equipment, such as waviness and roundness analyzers, noise and vibration testers, and grease test rigs, as well as calibration with traceability, machine training and support, and upgrades and refurbishment services; and vehicle aftermarket products. It also provides application engineering services consisting of technical consultancy, numerical simulation and design, and root cause analysis; asset management services, such as assessment and benchmarking, maintenance strategy review, spare parts and inventory management, and lubrication management; condition-based maintenance, including vibration analysis and diagnostics, thermography, lubrication analysis, and condition monitoring system installation; mechanical maintenance comprising mounting and dismounting, precision alignment, and balancing; remanufacturing and customization; and training solutions, which include instructor-led training, e-learning courses, and webinar recordings. The company serves the aerospace, agriculture, automotive, construction, food and beverage, general machinery, machine tools, marine, material handling, metals, mining, mineral processing, ocean energy, pulp and paper, railways, and wind industries. AB SKF (publ) was incorporated in 1907 and is headquartered in Gothenburg, Sweden.