Analyzing Caesarstone (NASDAQ:CSTE) and Simpson Manufacturing (NYSE:SSD)

Caesarstone (NASDAQ:CSTE) and Simpson Manufacturing (NYSE:SSD) are both construction companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, earnings, analyst recommendations, risk, profitability, valuation and institutional ownership.

Valuation and Earnings

This table compares Caesarstone and Simpson Manufacturing”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Caesarstone	$400.66 million	0.07	-$42.83 million	($2.03)	-0.42
Simpson Manufacturing	$2.31 billion	2.92	$322.22 million	$8.21	19.79

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

Dividends

Caesarstone pays an annual dividend of $0.19 per share and has a dividend yield of 22.1%. Simpson Manufacturing pays an annual dividend of $1.16 per share and has a dividend yield of 0.7%. Caesarstone pays out -9.4% of its earnings in the form of a dividend. Simpson Manufacturing pays out 14.1% 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. Simpson Manufacturing has increased its dividend for 11 consecutive years. Caesarstone is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Caesarstone has a beta of 0.2, meaning that its share price is 80% less volatile than the S&P 500. Comparatively, Simpson Manufacturing has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Caesarstone and Simpson Manufacturing, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Caesarstone	1	0	0	0	1.00
Simpson Manufacturing	0	2	1	0	2.33

Simpson Manufacturing has a consensus target price of $201.00, suggesting a potential upside of 23.68%. Given Simpson Manufacturing’s stronger consensus rating and higher possible upside, analysts clearly believe Simpson Manufacturing is more favorable than Caesarstone.

Institutional and Insider Ownership

33.7% of Caesarstone shares are held by institutional investors. Comparatively, 93.7% of Simpson Manufacturing shares are held by institutional investors. 0.4% of Simpson Manufacturing shares are held 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.

Profitability

This table compares Caesarstone and Simpson Manufacturing’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Caesarstone	-14.77%	-16.14%	-7.93%
Simpson Manufacturing	14.90%	18.11%	11.90%

Summary

Simpson Manufacturing beats Caesarstone on 15 of the 17 factors compared between the two stocks.

About Caesarstone

Caesarstone Ltd., together with its subsidiaries, designs, develops, manufactures, and markets engineered stone and other materials under the Caesarstone brand in the United States, Canada, Latin America, Australia, Asia, Europe, the Middle East and Africa, and Israel. The company’s engineered stone slabs are primarily used as indoor and outdoor kitchen countertops in the renovation and remodeling, and residential construction sectors. Its products are also used in other applications, such as vanity tops, wall panels, back splashes, floor tiles, stairs, furniture, and other interior and exterior surfaces that are used in various residential and non-residential applications. The company also offers porcelain products under the Lioli brand for countertops, flooring, and cladding applications; sells natural stone, sinks, and various ancillary fabrication tools and materials; and resells natural stones, as well as various ancillaries, and fabrication and installation accessories, as well as provides fabrication and installation services. It sells its products directly to wholesalers, resellers, and fabricators; and through direct sales force and indirect network of independent distributors. The company was formerly known as Caesarstone Sdot Yam Ltd. and changed its name to Caesarstone Ltd. in June 2016. Caesarstone Ltd. was founded in 1987 and is headquartered in Menashe, Israel.

About Simpson Manufacturing

Simpson Manufacturing Co., Inc., through its subsidiaries, designs, engineers, manufactures, and sells structural solutions for wood, concrete, and steel connections. The company offers wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls, and pre-fabricated lateral systems for use in light-frame construction; and concrete construction products comprising adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools, fiber-reinforced materials, and other repair products for use in concrete, masonry, and steel construction, as well as grouts, coatings, sealers, mortars, fiberglass and fiber-reinforced polymer systems, and asphalt products for use in concrete construction repair, and strengthening and protection products. It also provides connectors and lateral products for wood framing, timber and offsite construction, structural steel construction, and cold-formed steel applications; and mechanical and adhesive anchors for concrete and masonry construction applications. In addition, the company offers engineering and design services, as well as software solutions that facilitate the specification, selection, and use of its products. It markets its products to the residential construction, light industrial and commercial construction, infrastructure construction, remodeling, and do-it-yourself markets in the United States, Canada, France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands, Belgium, Spain, Italy, Romania, Sweden, Norway, Australia, New Zealand, China, Taiwan, and Vietnam. The company was founded in 1956 and is headquartered in Pleasanton, California.