Illinois Tool Works (NYSE: ITW) and Trinity Industries (NYSE:TRN) are both mid-cap industrial products companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitabiliy and dividends.
This is a summary of recent ratings and price targets for Illinois Tool Works and Trinity Industries, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Illinois Tool Works||0||6||6||0||2.50|
Illinois Tool Works currently has a consensus target price of $152.18, suggesting a potential upside of 7.67%. Trinity Industries has a consensus target price of $26.29, suggesting a potential downside of 8.32%. Given Illinois Tool Works’ stronger consensus rating and higher probable upside, equities analysts clearly believe Illinois Tool Works is more favorable than Trinity Industries.
Illinois Tool Works pays an annual dividend of $2.60 per share and has a dividend yield of 1.8%. Trinity Industries pays an annual dividend of $0.52 per share and has a dividend yield of 1.8%. Illinois Tool Works pays out 42.1% of its earnings in the form of a dividend. Trinity Industries pays out 32.1% 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. Illinois Tool Works has increased its dividend for 6 consecutive years and Trinity Industries has increased its dividend for 53 consecutive years.
Insider & Institutional Ownership
74.8% of Illinois Tool Works shares are held by institutional investors. Comparatively, 80.8% of Trinity Industries shares are held by institutional investors. 0.9% of Illinois Tool Works shares are held by insiders. Comparatively, 2.0% of Trinity Industries shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This table compares Illinois Tool Works and Trinity Industries’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Illinois Tool Works||15.50%||46.57%||13.69%|
Earnings and Valuation
This table compares Illinois Tool Works and Trinity Industries’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Illinois Tool Works||$13.96 billion||3.48||$3.70 billion||$6.18||22.87|
|Trinity Industries||$4.00 billion||1.08||$858.50 million||$1.62||17.70|
Illinois Tool Works has higher revenue and earnings than Trinity Industries. Trinity Industries 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.
Risk and Volatility
Illinois Tool Works has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500. Comparatively, Trinity Industries has a beta of 2.18, indicating that its stock price is 118% more volatile than the S&P 500.
Illinois Tool Works beats Trinity Industries on 12 of the 17 factors compared between the two stocks.
About Illinois Tool Works
Illinois Tool Works Inc. is a manufacturer of industrial products and equipment. The Company operates through seven segments. The Automotive OEM segment produces components and fasteners for automotive-related applications. The Food Equipment segment offers commercial food equipment. The Test & Measurement and Electronics segment produces test and measurement, and electronic manufacturing and maintenance, repair and operations (MRO) solutions. The Welding segment produces welding equipment, consumables and accessories for industrial and commercial applications. 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 supplies engineered fastening systems and solutions. The Specialty Products segment produces beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners.
About Trinity Industries
Trinity Industries, Inc. is a diversified industrial company that owns businesses providing products and services to the energy, chemical, agriculture, transportation and construction sectors. The Company’s products and services include railcars and railcar parts; parts and steel components; the leasing, management and maintenance of railcars; highway products; construction aggregates; inland barges; structural wind towers; steel utility structures; storage and distribution containers, and trench shields and shoring products. The Company’s segments include the Rail Group, Construction Products Group, Inland Barge Group, Energy Equipment Group, Railcar Leasing and Management Services Group, and All Other. Its All Other segment includes its captive insurance and transportation companies, and other peripheral businesses. It manufactures a line of railcars, including autorack cars, box cars, covered hopper cars, gondola cars, intermodal cars, open hopper cars and tank cars.
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