Analyzing Salzgitter (OTCMKTS:SZGPY) and Aperam (OTCMKTS:APEMY)

Salzgitter (OTCMKTS:SZGPY) and Aperam (OTCMKTS:APEMY) are both basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Dividends

Salzgitter pays an annual dividend of $0.01 per share and has a dividend yield of 0.3%. Aperam pays an annual dividend of $1.97 per share and has a dividend yield of 5.2%. Salzgitter pays out -2.5% of its earnings in the form of a dividend. Aperam pays out -1,641.7% 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. Aperam is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Salzgitter and Aperam’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Salzgitter	-4.45%	-9.40%	-4.03%
Aperam	-0.13%	0.47%	0.25%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Salzgitter and Aperam, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Salzgitter	2	2	1	1	2.17
Aperam	0	3	0	0	2.00

Risk and Volatility

Salzgitter has a beta of 1.5, meaning that its stock price is 50% more volatile than the S&P 500. Comparatively, Aperam has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500.

Valuation & Earnings

This table compares Salzgitter and Aperam”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Salzgitter	$10.83 billion	0.17	-$381.12 million	($0.40)	-8.68
Aperam	$6.77 billion	0.41	$249.96 million	($0.12)	-315.83

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

Summary

Aperam beats Salzgitter on 8 of the 14 factors compared between the two stocks.

About Salzgitter

Salzgitter AG, together with its subsidiaries, engages in steel and technology businesses worldwide. It operates through four segments: Steel Production, Steel Processing, Trading, and Technology. The Steel Production segment manufactures steel and special steels, such as hot-rolled wide strip, steel sheet, sections, tailored blanks, as well as scrap trading. The Steel Processing segment produces various high-grade heavy plates; and manufactures line pipes, HFI-welded tubes, and precision and stainless-steel tubes. The Trading segment operates a European sales network, as well as trading companies and agencies worldwide. The Technology segment engages in the provision of machinery and plants for the filling and packaging of beverages, as well as special machinery engineering for shoe manufacturing and elastomer production. The company also provides IT, facility management, logistics, automotive engineering, and research and development services, as well as supplies raw materials. The company was founded in 1858 and is headquartered in Salzgitter, Germany.

About Aperam

Aperam S.A., together with its subsidiaries, produces and sells stainless and specialty steel products worldwide. It operates through four segments: Stainless & Electrical Steel; Services & Solutions; Alloys & Specialties; and Recycling & Renewables. The company offers a range of stainless steel products, including grain oriented and non-grain oriented electrical steel products, and specialty alloys. It is also involved in the management of direct sales of stainless steel products from production facilities; distribution of its products; and the provision of transformation services that include value added and customized steel solutions. In addition, the company designs, produces, and transforms various specialty alloys and other specific stainless steels in forms, such as bars, semis, cold-rolled strips, wire and wire rods, and plates in a range on grades. Further, it engages in the trading, processing, and recycling of raw materials, such as superalloys and titanium; provides Recyco, an electric arc furnace recycling facility that retrieves dust and sludge to recycle stainless steel raw materials and reduce waste; and produces wood and charcoal from cultivated eucalyptus forests. The company serves customers in aerospace, automotive, catering, construction, household appliances, electrical engineering, industrial processes, medical, and oil and gas industries. It distributes its products through a network of steel service centers, transformation facilities, and sales offices. The company was incorporated in 2010 and is headquartered in Luxembourg, Luxembourg.