Willis Lease Finance (NASDAQ:WLFC) versus Ryerson (NYSE:RYZ) Critical Review

Ryerson (NYSE:RYZ) and Willis Lease Finance (NASDAQ:WLFC) are both small-cap industrials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.

Earnings and Valuation

This table compares Ryerson and Willis Lease Finance”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ryerson	$4.57 billion	0.29	-$56.40 million	($1.24)	-20.30
Willis Lease Finance	$730.24 million	1.63	$113.76 million	$3.99	14.10

Willis Lease Finance has lower revenue, but higher earnings than Ryerson. Ryerson is trading at a lower price-to-earnings ratio than Willis Lease Finance, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

94.8% of Ryerson shares are owned by institutional investors. Comparatively, 93.7% of Willis Lease Finance shares are owned by institutional investors. 6.6% of Ryerson shares are owned by insiders. Comparatively, 53.3% of Willis Lease Finance shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Ryerson has a beta of 1.57, meaning that its share price is 57% more volatile than the S&P 500. Comparatively, Willis Lease Finance has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Profitability

This table compares Ryerson and Willis Lease Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ryerson	-0.56%	-0.62%	-0.21%
Willis Lease Finance	11.80%	14.11%	2.64%

Dividends

Ryerson pays an annual dividend of $0.75 per share and has a dividend yield of 3.0%. Willis Lease Finance pays an annual dividend of $0.53 per share and has a dividend yield of 0.9%. Ryerson pays out -60.5% of its earnings in the form of a dividend. Willis Lease Finance pays out 13.3% 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. Ryerson is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and price targets for Ryerson and Willis Lease Finance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ryerson	1	2	0	0	1.67
Willis Lease Finance	0	1	1	1	3.00

Willis Lease Finance has a consensus price target of $75.50, indicating a potential upside of 34.22%. Given Willis Lease Finance’s stronger consensus rating and higher probable upside, analysts clearly believe Willis Lease Finance is more favorable than Ryerson.

Summary

Willis Lease Finance beats Ryerson on 12 of the 17 factors compared between the two stocks.

About Ryerson

Ryerson Holding Corporation, together with its subsidiaries, processes and distributes industrial metals in the United States, Canada, Mexico, and China. It offers a line of products in carbon steel, stainless steel, alloy steels, and aluminum, as well as nickel and red metals in various shapes and forms, including coils, sheets, rounds, hexagons, square and flat bars, plates, structural, and tubing. The company also provides various processing services, such as bending, beveling, blanking, blasting, burning, cutting-to-length, drilling, embossing, flattening, forming, grinding, laser cutting, machining, notching, painting, perforating, polishing, punching, rolling, sawing, scribing, shearing, slitting, stamping, tapping, threading, welding, or other techniques to process materials. It serves various industries, including commercial ground transportation, metal fabrication and machine shops, industrial machinery and equipment manufacturing, consumer durable equipment, HVAC manufacturing, construction equipment manufacturing, food processing and agricultural equipment manufacturing, and oil and gas. The company was founded in 1842 and is headquartered in Chicago, Illinois.

About Willis Lease Finance

Willis Lease Finance Corporation operates as a lessor and servicer of commercial aircraft and aircraft engines worldwide. The company operates through two segments, Leasing and Related Operations, and Spare Parts Sales. The Leasing and Related Operations segment engages in acquiring and leasing commercial aircraft, aircraft engines, and other aircraft equipment, as well as the purchase and resale of commercial aircraft engines and other aircraft equipment, and other related businesses. The Spare Parts Sales segment purchases and resells after-market engine parts, whole engines, engine modules, and portable aircraft components. The company also focuses on engine management and consulting business. It serves commercial aircraft operators, as well as maintenance, repair, and overhaul organizations. As of December 31, 2023, it had a total lease portfolio of 337 engines, 12 aircraft, one marine vessel, and other leased parts and equipment, and with 74 lessees in 42 countries; and managed a total lease portfolio of 198 engines, aircraft, and related equipment for other parties. The company was founded in 1985 and is headquartered in Coconut Creek, Florida.