Critical Survey: Twin Disc (TWIN) versus Its Competitors

Twin Disc (NASDAQ:TWIN) is one of 436 publicly-traded companies in the “Machinery” industry, but how does it contrast to its peers? We will compare Twin Disc to similar businesses based on the strength of its dividends, institutional ownership, profitability, analyst recommendations, earnings, risk and valuation.

Profitability

This table compares Twin Disc and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Twin Disc	9.06%	6.78%	3.31%
Twin Disc Competitors	-1,044.47%	-15.02%	0.57%

Dividends

Twin Disc pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. Twin Disc pays out 8.4% of its earnings in the form of a dividend. As a group, “Machinery” companies pay a dividend yield of 2.8% and pay out 24.6% of their earnings in the form of a dividend.

Risk and Volatility

Twin Disc has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, Twin Disc’s peers have a beta of 5.11, suggesting that their average share price is 411% more volatile than the S&P 500.

Valuation and Earnings

This table compares Twin Disc and its peers gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Twin Disc	$381.27 million	$27.08 million	10.97
Twin Disc Competitors	$4.63 billion	$364.05 million	3.84

Twin Disc’s peers have higher revenue and earnings than Twin Disc. Twin Disc is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Insider and Institutional Ownership

65.2% of Twin Disc shares are held by institutional investors. Comparatively, 51.7% of shares of all “Machinery” companies are held by institutional investors. 21.1% of Twin Disc shares are held by company insiders. Comparatively, 14.3% of shares of all “Machinery” companies are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and target prices for Twin Disc and its peers, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Twin Disc	0	1	2	0	2.67
Twin Disc Competitors	4194	14692	18188	804	2.41

Twin Disc presently has a consensus target price of $30.00, suggesting a potential upside of 14.92%. As a group, “Machinery” companies have a potential upside of 32.43%. Given Twin Disc’s peers higher possible upside, analysts clearly believe Twin Disc has less favorable growth aspects than its peers.

Summary

Twin Disc beats its peers on 9 of the 15 factors compared.

Twin Disc Company Profile

Twin Disc, Incorporated engages in the design, manufacture, and sale of marine and heavy duty off-highway power transmission equipment in the United States, the Netherlands, China, Australia, Italy, and internationally. The company operates in two segments, Manufacturing and Distribution. Its principal products include marine transmissions, azimuth drives, surface drives, propellers, and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and controls systems. The company also provides third-party manufactured products. It sells its products through a direct sales force and distributor network to customers primarily in the pleasure craft, commercial marine, patrol, and military marine markets, as well as in the energy and natural resources, government, agriculture, recycling, construction, oil and gas, and industrial markets. The company was incorporated in 1918 and is headquartered in Milwaukee, Wisconsin.