Head-To-Head Contrast: AMETEK (NYSE:AME) versus SMC (OTCMKTS:SMCAY)

AMETEK (NYSE:AME) and SMC (OTCMKTS:SMCAY) are both large-cap technology companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, valuation, earnings, risk and dividends.

Analyst Recommendations

This is a summary of current ratings and price targets for AMETEK and SMC, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AMETEK	0	5	13	1	2.79
SMC	0	2	1	0	2.33

AMETEK currently has a consensus price target of $278.06, indicating a potential upside of 15.39%. Given AMETEK’s stronger consensus rating and higher possible upside, analysts clearly believe AMETEK is more favorable than SMC.

Dividends

AMETEK pays an annual dividend of $1.36 per share and has a dividend yield of 0.6%. SMC pays an annual dividend of $0.18 per share and has a dividend yield of 1.0%. AMETEK pays out 19.2% of its earnings in the form of a dividend. SMC pays out 17.5% 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. AMETEK has increased its dividend for 6 consecutive years. SMC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares AMETEK and SMC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AMETEK	19.91%	17.12%	10.68%
SMC	21.94%	9.40%	8.53%

Valuation and Earnings

This table compares AMETEK and SMC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AMETEK	$7.40 billion	7.47	$1.48 billion	$7.09	33.99
SMC	$5.60 billion	4.26	$1.10 billion	$1.03	18.12

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

Institutional & Insider Ownership

87.4% of AMETEK shares are owned by institutional investors. Comparatively, 1.0% of SMC shares are owned by institutional investors. 0.5% of AMETEK shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

AMETEK has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500. Comparatively, SMC has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500.

Summary

AMETEK beats SMC on 14 of the 18 factors compared between the two stocks.

About AMETEK

AMETEK, Inc. is a global manufacturer of electronic instruments and electromechanical products. Its businesses serve a range of markets, including aerospace, energy, industrial manufacturing, medical, and transportation. The company’s products include analytical and process instruments, monitoring and measurement systems, aerospace components, precision motors and pumps, and engineered materials. AMETEK organizes its operations into two groups: Electronic Instruments and Electromechanical. Founded in 1930, AMETEK serves customers around the world through manufacturing facilities, sales offices, and service operations in multiple countries.

About SMC

SMC Corporation is a Japan-based manufacturer of components and systems used in factory automation. Its products include pneumatic control equipment, valves, actuators, air-preparation units, vacuum equipment and temperature-control devices. The company’s products help control the movement of air, fluids and machinery in automated production processes. SMC serves manufacturers across a range of industries, including automotive, electronics and food processing. Founded in Japan in 1959, SMC has grown into an international supplier, serving customers through operations and sales networks in markets around the world.