Critical Contrast: Mueller Industries (NYSE:MLI) & AGCO (NYSE:AGCO)

AGCO (NYSE:AGCO) and Mueller Industries (NYSE:MLI) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, valuation, dividends and profitability.

Dividends

AGCO pays an annual dividend of $1.20 per share and has a dividend yield of 1.1%. Mueller Industries pays an annual dividend of $0.70 per share and has a dividend yield of 1.3%. AGCO pays out 30.8% of its earnings in the form of a dividend. Mueller Industries pays out 17.9% 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. AGCO has increased its dividend for 12 consecutive years and Mueller Industries has increased its dividend for 5 consecutive years. Mueller Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

78.8% of AGCO shares are held by institutional investors. Comparatively, 94.5% of Mueller Industries shares are held by institutional investors. 0.6% of AGCO shares are held by insiders. Comparatively, 2.3% of Mueller Industries shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares AGCO and Mueller Industries”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AGCO	$10.08 billion	0.77	$726.50 million	$3.89	28.90
Mueller Industries	$4.18 billion	2.88	$765.19 million	$3.90	14.15

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

Volatility and Risk

AGCO has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500. Comparatively, Mueller Industries has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500.

Profitability

This table compares AGCO and Mueller Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AGCO	2.76%	9.66%	3.39%
Mueller Industries	17.26%	25.23%	21.32%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AGCO	2	7	5	0	2.21
Mueller Industries	0	0	3	0	3.00

AGCO currently has a consensus price target of $123.67, indicating a potential upside of 9.99%. Mueller Industries has a consensus price target of $75.50, indicating a potential upside of 36.84%. Given Mueller Industries’ stronger consensus rating and higher probable upside, analysts clearly believe Mueller Industries is more favorable than AGCO.

Summary

Mueller Industries beats AGCO on 12 of the 17 factors compared between the two stocks.

About AGCO

AGCO Corporation manufactures and distributes agricultural equipment and related replacement parts worldwide. It offers horsepower tractors for row crop production, soil cultivation, planting, land leveling, seeding, and commercial hay operations; utility tractors for small- and medium-sized farms, as well as for dairy, livestock, orchards, and vineyards; and compact tractors for small farms, specialty agricultural industries, landscaping, equestrian, and residential uses. The company also provides grain storage bins and related drying and handling equipment systems; seed-processing systems; swine and poultry feed storage and delivery; ventilation and watering systems; and egg production systems and broiler production equipment. In addition, it offers round and rectangular balers, loader wagons, self-propelled windrowers, forage harvesters, disc mowers, spreaders, rakes, tedders, and mower conditioners for harvesting and packaging vegetative feeds used in the beef cattle, dairy, horse, and renewable fuel industries. Further, the company provides implements, including disc harrows leveling seed beds and mixing chemicals with the soils; heavy tillage to break up soil and mix crop residue into topsoil; field cultivators that prepare smooth seed bed and destroy weeds; drills for small grain seeding; planters and other planting equipment; and loaders. Additionally, it offers combines for harvesting grain crops, such as corn, wheat, soybeans, and rice; and application equipment, such as self-propelled, three- and four-wheeled vehicles, and related equipment for liquid and dry fertilizers and crop protection chemicals, and for after crops emerge from the ground, as well as produces diesel engines, gears, and generating sets. The company markets its products under the Fendt, GSI, Massey Ferguson, Precision Planting, and Valtra brands through a network of independent dealers and distributors. AGCO Corporation was founded in 1990 and is headquartered in Duluth, Georgia.

About Mueller Industries

Mueller Industries, Inc. manufactures and sells copper, brass, aluminum, and plastic products in the United States, the United Kingdom, Canada, South Korea, the Middle East, China, and Mexico. It operates through three segments: Piping Systems, Industrial Metals, and Climate. The Piping Systems segment offers copper tubes, fittings, line sets, and pipe nipples. It also resells steel pipes, brass and plastic plumbing valves, malleable iron fittings and faucets, and plumbing specialties; and supplies water tubes. This segment sells its products to wholesalers in the plumbing and refrigeration markets, distributors to the manufactured housing and recreational vehicle industries, building material retailers, and air-conditioning original equipment manufacturers (OEMs). The Industrial Metals segment manufactures brass, bronze, and copper alloy rods; plumbing brass, valves, fittings, and gas assemblies; cold-form aluminum and copper products; machining of aluminum, steel, brass, and cast iron impacts and castings; brass and aluminum forgings; brass, aluminum, and stainless-steel valves; fluid control solutions; and gas train assembles to OEMs in the industrial, construction, HVAC, plumbing, and refrigeration markets. The Climate segment offers valves, protection devices, and brass fittings for various OEMs in the commercial HVAC and refrigeration markets; high-pressure components and accessories for the air-conditioning and refrigeration markets; coaxial heat exchangers and twisted tubes for the HVAC, geothermal, refrigeration, swimming pool heat pump, marine, ice machine, commercial boiler, and heat reclamation markets; and insulated HVAC flexible duct systems. Mueller Industries, Inc. was founded in 1917 and is headquartered in Collierville, Tennessee.