GrafTech International (NYSE:EAF) vs. Babcock (NYSE:BW) Critical Survey

Babcock (NYSE:BW) and GrafTech International (NYSE:EAF) are both small-cap industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, risk, profitability and valuation.

Institutional & Insider Ownership

83.2% of Babcock shares are owned by institutional investors. Comparatively, 92.8% of GrafTech International shares are owned by institutional investors. 2.8% of Babcock shares are owned by company insiders. Comparatively, 1.2% of GrafTech International shares are owned 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.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Babcock and GrafTech International, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Babcock	1	2	3	0	2.33
GrafTech International	3	3	0	0	1.50

Babcock currently has a consensus target price of $14.25, indicating a potential upside of 68.64%. GrafTech International has a consensus target price of $10.67, indicating a potential upside of 59.44%. Given Babcock’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Babcock is more favorable than GrafTech International.

Profitability

This table compares Babcock and GrafTech International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Babcock	-2.17%	-4.51%	0.70%
GrafTech International	-34.58%	N/A	-17.50%

Earnings and Valuation

This table compares Babcock and GrafTech International”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Babcock	$587.70 million	2.14	-$36.16 million	($0.18)	-46.94
GrafTech International	$504.13 million	0.35	-$219.84 million	($6.80)	-0.98

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

Volatility & Risk

Babcock has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500. Comparatively, GrafTech International has a beta of 1.83, indicating that its stock price is 83% more volatile than the S&P 500.

Summary

Babcock beats GrafTech International on 10 of the 14 factors compared between the two stocks.

About Babcock

Babcock & Wilcox Enterprises, Inc. engages in the provision of fossil and renewable power generation and environmental equipment. It operates through the following segments: B&W Renewable, B&W Environmental, and B&W Thermal. The B&W Renewable segment supports a circular economy, diverting waste from landfills to use for power generation and replacing fossil fuels, while recovering metals and reducing emissions. The B&W Environmental segment focuses on systems for cooling, ash handling, particulate control, nitrogen oxides and sulfur dioxides removal, chemical looping for carbon control, and mercury control. The B&W Thermal segment offers steam generation equipment, aftermarket parts, construction, maintenance, and field services for plants in the power generation, oil and gas, and industrial sectors. The company was founded by George H. Babcock, Stephen Wilcox, Jr., and Joseph P. Manton in 1856 and is headquartered in Akron, OH.

About GrafTech International

GrafTech International Ltd. research, develops, manufactures, and sells graphite and carbon-based solutions worldwide. The company offers graphite electrodes to produce electric arc furnace steel and other ferrous and non-ferrous metals; and petroleum needle coke, a crystalline form of carbon used in the production of graphite electrodes and synthetic graphite. It sells its products primarily through direct sales force, independent sales representatives, and distributors. GrafTech International Ltd. was founded in 1886 and is headquartered in Brooklyn Heights, Ohio.