Financial Analysis: Cactus (NYSE:WHD) versus Tenaris (NYSE:TS)

Tenaris (NYSE:TS) and Cactus (NYSE:WHD) are both energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, earnings, dividends, profitability and risk.

Insider & Institutional Ownership

10.4% of Tenaris shares are owned by institutional investors. Comparatively, 85.1% of Cactus shares are owned by institutional investors. 0.2% of Tenaris shares are owned by insiders. Comparatively, 12.9% of Cactus shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Tenaris and Cactus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tenaris	15.88%	11.14%	9.40%
Cactus	6.01%	16.66%	10.81%

Dividends

Tenaris pays an annual dividend of $2.36 per share and has a dividend yield of 4.2%. Cactus pays an annual dividend of $0.60 per share and has a dividend yield of 0.9%. Tenaris pays out 63.1% of its earnings in the form of a dividend. Cactus pays out 51.3% 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. Cactus has increased its dividend for 4 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Tenaris and Cactus, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tenaris	0	6	4	0	2.40
Cactus	0	4	3	0	2.43

Tenaris presently has a consensus target price of $62.45, suggesting a potential upside of 10.36%. Cactus has a consensus target price of $66.80, suggesting a potential downside of 4.51%. Given Tenaris’ higher possible upside, equities analysts plainly believe Tenaris is more favorable than Cactus.

Valuation and Earnings

This table compares Tenaris and Cactus”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tenaris	$12.04 billion	2.52	$1.93 billion	$3.74	15.13
Cactus	$1.08 billion	5.20	$166.01 million	$1.17	59.79

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

Volatility & Risk

Tenaris has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, Cactus has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500.

Summary

Cactus beats Tenaris on 10 of the 17 factors compared between the two stocks.

About Tenaris

Tenaris S.A., together with its subsidiaries, produces and sells seamless and welded steel tubular products and related services for the oil and gas industry, and other industrial applications. The company offers steel casings, tubing products, mechanical and structural pipes, line pipes, cold-drawn pipes, and premium joints and couplings; and coiled tubing products for oil and gas drilling and workovers, and subsea pipelines. It also manufactures sucker rods used in oil extraction activities and tubes for plumbing and construction applications; and offers oilfield/hydraulic fracturing services and energy and raw materials, and financial services. The company operates in North America, South America, Europe, the Middle East and Africa, and the Asia Pacific. Tenaris S.A. was founded in 2001 and is based in Luxembourg. Tenaris S.A. operates as a subsidiary of Techint Holdings S.à r.l.

About Cactus

Cactus, Inc., together with its subsidiaries, designs, manufactures, sells, and leases pressure control and spoolable pipes in the United States, Australia, Canada, the Middle East, and internationally. It operates through two segments, Pressure Control and Spoolable Technologies. The Pressure Control segment designs, manufactures, sells, and rents a range of wellhead and pressure control equipment under the Cactus Wellhead brand name through service centers. Its products are sold and rented primarily for onshore unconventional oil and gas wells for drilling, completion, and production phases of the wells. This segment also provides field services to install, maintain, and handle the equipment. The Spoolable Technologies segment designs, manufactures, and sells spoolable pipes and associated end fittings under the FlexSteel brand name. Its products are primarily used to transport oil, gas, and other liquids. This segment also provides field services and rental items through service centers and pipe yards, as well as offers equipment and services internationally. In addition, the company offers repair and refurbishment services. Cactus, Inc. was founded in 2011 and is headquartered in Houston, Texas.