Critical Contrast: CRH (NYSE:CRH) vs. Simpson Manufacturing (NYSE:SSD)

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

Dividends

Simpson Manufacturing pays an annual dividend of $1.16 per share and has a dividend yield of 0.6%. CRH pays an annual dividend of $1.11 per share and has a dividend yield of 0.9%. Simpson Manufacturing pays out 14.1% of its earnings in the form of a dividend. CRH pays out 22.1% 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. Simpson Manufacturing has raised its dividend for 11 consecutive years.

Earnings and Valuation

This table compares Simpson Manufacturing and CRH”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Simpson Manufacturing	$2.31 billion	3.49	$322.22 million	$8.21	23.70
CRH	$35.57 billion	2.40	$3.46 billion	$5.02	25.33

CRH has higher revenue and earnings than Simpson Manufacturing. Simpson Manufacturing is trading at a lower price-to-earnings ratio than CRH, indicating that it is currently the more affordable of the two stocks.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Simpson Manufacturing	14.90%	18.11%	11.90%
CRH	9.30%	16.25%	6.94%

Volatility and Risk

Simpson Manufacturing has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500. Comparatively, CRH has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.

Institutional and Insider Ownership

93.7% of Simpson Manufacturing shares are held by institutional investors. Comparatively, 62.5% of CRH shares are held by institutional investors. 0.4% of Simpson Manufacturing shares are held by insiders. Comparatively, 0.1% of CRH shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Simpson Manufacturing and CRH, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Simpson Manufacturing	0	2	1	0	2.33
CRH	0	3	14	2	2.95

Simpson Manufacturing currently has a consensus price target of $201.00, suggesting a potential upside of 3.32%. CRH has a consensus price target of $135.87, suggesting a potential upside of 6.85%. Given CRH’s stronger consensus rating and higher probable upside, analysts plainly believe CRH is more favorable than Simpson Manufacturing.

Summary

Simpson Manufacturing beats CRH on 10 of the 18 factors compared between the two stocks.

About Simpson Manufacturing

Simpson Manufacturing Co., Inc., through its subsidiaries, designs, engineers, manufactures, and sells structural solutions for wood, concrete, and steel connections. The company offers wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls, and pre-fabricated lateral systems for use in light-frame construction; and concrete construction products comprising adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools, fiber-reinforced materials, and other repair products for use in concrete, masonry, and steel construction, as well as grouts, coatings, sealers, mortars, fiberglass and fiber-reinforced polymer systems, and asphalt products for use in concrete construction repair, and strengthening and protection products. It also provides connectors and lateral products for wood framing, timber and offsite construction, structural steel construction, and cold-formed steel applications; and mechanical and adhesive anchors for concrete and masonry construction applications. In addition, the company offers engineering and design services, as well as software solutions that facilitate the specification, selection, and use of its products. It markets its products to the residential construction, light industrial and commercial construction, infrastructure construction, remodeling, and do-it-yourself markets in the United States, Canada, France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands, Belgium, Spain, Italy, Romania, Sweden, Norway, Australia, New Zealand, China, Taiwan, and Vietnam. The company was founded in 1956 and is headquartered in Pleasanton, California.

About CRH

CRH plc, together with its subsidiaries, provides building materials solutions in Ireland and internationally. It operates through four segments: Americas Materials Solutions, Americas Building Solutions, Europe Materials Solutions, and Europe Building Solutions. The company provides solutions for the construction and maintenance of public infrastructure and commercial and residential buildings; and produces and sells aggregates, cement, readymixed concrete, and asphalt, as well as provides paving and construction services. It also manufactures, supplies, and delivers solutions for the built environment in communities across North America; and offers building and infrastructure solutions serving complex critical utility infrastructure, such as water, energy, transportation, and telecommunications projects, and outdoor living solutions for enhancing private and public spaces. In addition, the company combines materials, products, and services to produce a wide range of architectural and infrastructural solutions for use in the building and renovation of critical utility infrastructure, commercial and residential buildings, and outdoor living spaces for the built environment. Further, it produces and supplies precast and pre-stressed concrete products comprising floor and wall elements, beams, vaults, pipes, and manholes; granite, limestone, and sandstone; concrete and polymer-based products, such as underground vaults, drainage systems, utility enclosures, and modular precast structures; engineered steel, polymer-based anchoring, fixing, and connecting solutions; concrete masonry, hardscape and related products, including pavers, blocks and curbs, retaining walls, and slabs; and fencing and railing systems, composite decking, lawn and garden products, and packaged concrete mixes. The company was founded in 1936 and is headquartered in Dublin, Ireland.