Reviewing Ferguson (NYSE:FERG) & Park-Ohio (NASDAQ:PKOH)

Park-Ohio (NASDAQ:PKOH) and Ferguson (NYSE:FERG) are both industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Volatility & Risk

Park-Ohio has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Ferguson has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Insider & Institutional Ownership

51.4% of Park-Ohio shares are held by institutional investors. Comparatively, 82.0% of Ferguson shares are held by institutional investors. 31.1% of Park-Ohio shares are held by insiders. Comparatively, 0.2% of Ferguson shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for Park-Ohio and Ferguson, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Park-Ohio	0	2	1	0	2.33
Ferguson	0	7	10	2	2.74

Park-Ohio currently has a consensus target price of $59.00, suggesting a potential upside of 21.20%. Ferguson has a consensus target price of $283.33, suggesting a potential upside of 26.74%. Given Ferguson’s stronger consensus rating and higher probable upside, analysts clearly believe Ferguson is more favorable than Park-Ohio.

Dividends

Park-Ohio pays an annual dividend of $0.50 per share and has a dividend yield of 1.0%. Ferguson pays an annual dividend of $3.56 per share and has a dividend yield of 1.6%. Park-Ohio pays out 26.6% of its earnings in the form of a dividend. Ferguson pays out 41.8% 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.

Profitability

This table compares Park-Ohio and Ferguson’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Park-Ohio	1.60%	10.55%	2.81%
Ferguson	6.82%	37.24%	12.31%

Valuation & Earnings

This table compares Park-Ohio and Ferguson”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Park-Ohio	$1.60 billion	0.44	$23.80 million	$1.88	25.89
Ferguson	$31.32 billion	1.38	$1.86 billion	$8.51	26.27

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

Summary

Ferguson beats Park-Ohio on 14 of the 17 factors compared between the two stocks.

About Park-Ohio

Park-Ohio Holdings Corp. provides supply chain management outsourcing services, capital equipment, and manufactured components in the United States, Europe, Asia, Mexico, Canada, and internationally. It operates through three segments: Supply Technologies, Assembly Components, and Engineered Products. The Supply Technologies segment offers Total Supply Management that comprises engineering and design support, part usage and cost analysis, supplier selection, quality assurance, bar coding, product packaging and tracking, just-in-time and point-of-use delivery, electronic billing, and ongoing technical support services, as well as provides spare parts and aftermarket products; and production components, such as valves, fuel hose assemblies, electro-mechanical hardware, labels, fittings, steering components, and other products. This segment also engineers and manufactures precision cold-formed and cold-extruded fasteners, and other products comprising locknuts, SPAC nuts, SPAC bolts, and wheel hardware. The Assembly Components segment offers direct fuel injection fuel rails and pipes, fuel filler pipes, and flexible multi-layer plastic and rubber assemblies; turbo charging and coolant hoses; and value-added services comprising design engineering, machining, and parts assembly. The Engineered Products segment provides engineered products, including induction heating and melting systems, pipe threading systems, and forged and machined products for ferrous and non-ferrous metals, silicon, coatings, forging, foundry, automotive, and construction equipment industries; engineers and installs mechanical forging presses; sells spare parts; field services; and forges aerospace and defense structural components, such as landing gears and struts, as well as rail products comprising railcar center plates and draft lugs. Park-Ohio Holdings Corp. was founded in 1907 and is headquartered in Cleveland, Ohio.

About Ferguson

Ferguson Enterprises Inc. distributes plumbing and heating products in North America. The company provides expertise, solutions, and products, including infrastructure, plumbing, appliances, fire, and fabrication, as well as heating, ventilation, and air conditioning (HVAC) to residential and non-residential customers. It also supplies specialist water and wastewater treatment products to residential, commercial, and infrastructure contractors, as well as supplies pipe, valves, and fittings solutions to industrial customers. In addition, it offers customized solutions, such as virtual design, fabrication, valve actuation, pre-assembly, kitting, installation, and project management services, as well as after-sales support that comprises warranty, credit, project-based billing, returns and maintenance, and repair and operations support. The company sells its products through a network of distribution centers, branches, counter service and specialist sales associates, showroom consultants, and e-commerce channels. Ferguson Enterprises Inc. was founded in 1953 and is headquartered in Newport News, Virginia.