Critical Analysis: Fanuc (OTCMKTS:FANUY) & ESAB (NYSE:ESAB)

Fanuc (OTCMKTS:FANUY) and ESAB (NYSE:ESAB) are both industrials companies, but which is the better business? We will compare the two companies based on the strength of their earnings, valuation, risk, institutional ownership, dividends, profitability and analyst recommendations.

Dividends

Fanuc pays an annual dividend of $0.21 per share and has a dividend yield of 1.1%. ESAB pays an annual dividend of $0.48 per share and has a dividend yield of 0.7%. Fanuc pays out 33.9% of its earnings in the form of a dividend. ESAB pays out 17.2% 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. ESAB has increased its dividend for 3 consecutive years.

Risk and Volatility

Fanuc has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500. Comparatively, ESAB has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Fanuc and ESAB, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fanuc	0	2	0	1	2.67
ESAB	0	1	7	0	2.88

ESAB has a consensus target price of $135.57, indicating a potential upside of 97.95%. Given ESAB’s stronger consensus rating and higher probable upside, analysts clearly believe ESAB is more favorable than Fanuc.

Profitability

This table compares Fanuc and ESAB’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fanuc	20.11%	9.60%	8.65%
ESAB	5.75%	14.48%	5.99%

Institutional & Insider Ownership

1.5% of Fanuc shares are owned by institutional investors. Comparatively, 91.1% of ESAB shares are owned by institutional investors. 7.2% of ESAB shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fanuc	$5.70 billion	6.50	$1.10 billion	$0.62	30.41
ESAB	$2.84 billion	1.50	$226.77 million	$2.79	24.55

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

Summary

ESAB beats Fanuc on 10 of the 18 factors compared between the two stocks.

About Fanuc

FANUC Corporation provides factory automation products in Japan, the Americas, Europe, China, the rest of Asia, and internationally. The company offers CNC series products, servo motors, lasers, robots, compact machining centers, electric injection molding machines, wire electrical discharge machines, and ultra-precision machines. It also provides FANUC intelligent edge link and drive system, an open platform for the manufacturing industry. FANUC Corporation was incorporated in 1950 and is headquartered in Yamanashi, Japan.

About ESAB

ESAB Corporation engages in the formulation, development, manufacture, and supply of consumable products and equipment for use in cutting, joining, automated welding, and gas control equipment. Its comprehensive range of welding consumables includes electrodes, cored and solid wires, and fluxes using a range of specialty and other materials; and cutting consumables comprising electrodes, nozzles, shields, and tips. The company's equipment ranges from portable welding machines to large customized automated cutting and welding systems. It also offers a range of software and digital solutions to help its customers increase their productivity, remotely monitor their welding operations, and digitize their documentation. The company sells its products under the ESAB brand to various end markets, such as general industry, infrastructure, renewable energy, medical and life sciences, transportation, construction, and energy. It offers its products through independent distributors and direct salespeople. The company operates in North America, South America, Europe, the Middle East, India, Africa, and the Asia Pacific. ESAB Corporation was founded in 1904 and is headquartered in North Bethesda, Maryland.