Financial Comparison: Illinois Tool Works (NYSE:ITW) and Greenbrier Companies (NYSE:GBX)

Greenbrier Companies (NYSE:GBX) and Illinois Tool Works (NYSE:ITW) are both industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, risk, earnings and analyst recommendations.

Profitability

This table compares Greenbrier Companies and Illinois Tool Works’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Greenbrier Companies	4.07%	6.49%	2.55%
Illinois Tool Works	19.39%	101.72%	19.64%

Risk and Volatility

Greenbrier Companies has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500. Comparatively, Illinois Tool Works has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Greenbrier Companies and Illinois Tool Works, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Greenbrier Companies	1	3	0	0	1.75
Illinois Tool Works	5	6	2	0	1.77

Greenbrier Companies presently has a consensus target price of $45.00, indicating a potential upside of 7.58%. Illinois Tool Works has a consensus target price of $281.25, indicating a potential upside of 4.38%. Given Greenbrier Companies’ higher possible upside, equities analysts plainly believe Greenbrier Companies is more favorable than Illinois Tool Works.

Dividends

Greenbrier Companies pays an annual dividend of $1.36 per share and has a dividend yield of 3.3%. Illinois Tool Works pays an annual dividend of $6.44 per share and has a dividend yield of 2.4%. Greenbrier Companies pays out 40.4% of its earnings in the form of a dividend. Illinois Tool Works pays out 58.4% 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. Greenbrier Companies has raised its dividend for 3 consecutive years and Illinois Tool Works has raised its dividend for 55 consecutive years. Greenbrier Companies is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Greenbrier Companies and Illinois Tool Works”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Greenbrier Companies	$3.24 billion	0.40	$204.10 million	$3.37	12.41
Illinois Tool Works	$16.04 billion	4.78	$3.07 billion	$11.03	24.43

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

Institutional & Insider Ownership

95.6% of Greenbrier Companies shares are owned by institutional investors. Comparatively, 79.8% of Illinois Tool Works shares are owned by institutional investors. 1.7% of Greenbrier Companies shares are owned by company insiders. Comparatively, 0.8% of Illinois Tool Works shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Illinois Tool Works beats Greenbrier Companies on 11 of the 17 factors compared between the two stocks.

About Greenbrier Companies

The Greenbrier Companies, Inc. designs, manufactures, and markets railroad freight car equipment in North America, Europe, and South America. It operates through three segments: Manufacturing; Maintenance Services; and Leasing & Management Services. The Manufacturing segment offers covered hopper cars, gondolas, open top hoppers, boxcars, center partition cars, tank cars, sustainable conversions, double-stack railcars, auto-max ii, multi-max, and multi-max plus products, intermodal cars, automobile transport, coil steel and metals, flat cars, sliding wall cars, pressurized tank cars, and non-pressurized tank cars. The Maintenance Services segment provides wheel services, including reconditioning of wheels and axles, new axle machining and finishing, and downsizing; operates a railcar repair, refurbishment, and maintenance network; and reconditions and manufactures railcar cushioning units, couplers, yokes, side frames, bolsters, and various other parts. The Leasing & Management Services segment offers operating leases and per diem leases for a fleet of approximately 13,400 railcars; and management services comprising railcar maintenance management, railcar accounting services, fleet management and logistics, administration, and railcar re-marketing. This segment provides management services for railroads, shippers, carriers, institutional investors, and other leasing and transportation companies. It serves railroads, leasing companies, financial institutions, shippers, carriers, and transportation companies. The company was founded in 1974 and is headquartered in Lake Oswego, Oregon.

About Illinois Tool Works

Illinois Tool Works Inc. manufactures and sells industrial products and equipment in the United States and internationally. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses. The Food Equipment segment provides warewashing, refrigeration, cooking, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services. The Test & Measurement and Electronics segment produces and sells equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. The Welding segment produces arc welding equipment; and metal arc welding consumables and related accessories. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment offers engineered fastening systems and solutions for the residential construction, renovation/remodel, and commercial construction markets. The Specialty Products segment provides beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. It serves the automotive OEM and tiers, MRO, commercial food equipment, construction, general industrial, industrial capital goods, consumer durables, automotive aftermarket end, and other markets. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912 and is based in Glenview, Illinois.