Critical Contrast: Brother Industries (OTCMKTS:BRTHY) versus SMC (OTCMKTS:SMCAY)

Brother Industries (OTCMKTS:BRTHY) and SMC (OTCMKTS:SMCAY) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, institutional ownership, profitability, analyst recommendations and dividends.

Profitability

This table compares Brother Industries and SMC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brother Industries	6.19%	7.84%	5.88%
SMC	19.84%	8.25%	7.46%

Analyst Ratings

This is a summary of current ratings for Brother Industries and SMC, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brother Industries	0	1	0	0	2.00
SMC	0	1	0	1	3.00

Insider and Institutional Ownership

1.0% of SMC shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Brother Industries and SMC”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brother Industries	$5.94 billion	0.98	$449.23 million	$2.88	15.80
SMC	$5.60 billion	4.76	$1.11 billion	$0.88	23.70

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

Risk and Volatility

Brother Industries has a beta of 0.15, suggesting that its stock price is 85% less volatile than the S&P 500. Comparatively, SMC has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500.

Dividends

Brother Industries pays an annual dividend of $0.44 per share and has a dividend yield of 1.0%. SMC pays an annual dividend of $0.09 per share and has a dividend yield of 0.4%. Brother Industries pays out 15.3% of its earnings in the form of a dividend. SMC pays out 10.2% 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.

Summary

SMC beats Brother Industries on 11 of the 14 factors compared between the two stocks.

About Brother Industries

Brother Industries, Ltd. manufactures and sells communications and printing equipment in Japan, the Americas, Europe, Asia, Oceania, the Middle East, Africa, and internationally. It operates through Printing & Solutions, Machinery, Domino, Nissei, Personal & Home, and Network & Contents segments. The Printing & Solutions segment offers inkjet printers; all-in-one black-and-white and color laser printers; scanners; and labeling systems, and label and mobile printers. The Machinery segment offers industrial sewing machines, machine tools, and garment printers. The Domino segment offers coding and marking equipment, and digital printing equipment. The Nissei segment provides gearmotors, high stiffness reducers, and gears. The Personal & Home segment provides sewing and cutting machines, sewing and embroidery machines, and commercial embroidery machines. The Network & Contents segment provides online karaoke systems and applications for smartphones/tablets, as well as content, nursing care, and video viewing services; and manages karaoke clubs. The company was formerly known as Nippon Sewing Machine Manufacturing Co. and changed its name to Brother Industries, Ltd. in 1962. Brother Industries, Ltd. was founded in 1908 and is headquartered in Nagoya, Japan.

About SMC

SMC Corporation manufactures, processes, and sells automatic control equipment, sintered filters, and various types of filtration equipment worldwide. The company offers air management system, directional control valves, air cylinders, rotatory actuators/air grippers, electric actuators/cylinders, fitting and tubing, and modular F.R.L./pressure control equipment, as well as vacuum, air preparation, and lubrication equipment. It also provides flow control equipment, speed controllers, silencers/exhaust/blow guns/pressure gauges, switches/sensors/controllers, static neutralization equipment, and industrial device communication equipment/wireless system. In addition, the company offers process valves, chemical liquid valves/fittings and needle valves/tubing, process pumps, temperature control equipment, and process gas equipment, as well as high vacuum equipment, industrial filters/sintered metal elements, and pneumatic instrumentation and hydraulic equipment. The company was formerly known as Shoketsu Kinzoku Kogyo Co., Ltd. and changed its name to SMC Corporation in April 1986. SMC Corporation was incorporated in 1959 and is headquartered in Tokyo, Japan.