Graco (NYSE:GGG) versus Twin Disc (NASDAQ:TWIN) Head-To-Head Analysis

Graco (NYSE:GGG) and Twin Disc (NASDAQ:TWIN) are both industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, dividends, valuation, profitability, institutional ownership, earnings and analyst recommendations.

Profitability

This table compares Graco and Twin Disc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Graco	22.96%	18.66%	15.22%
Twin Disc	6.26%	0.02%	0.01%

Valuation & Earnings

This table compares Graco and Twin Disc”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Graco	$2.25 billion	5.94	$521.84 million	$3.07	26.22
Twin Disc	$340.74 million	0.77	-$1.89 million	$1.50	12.06

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

Analyst Ratings

This is a breakdown of current ratings and target prices for Graco and Twin Disc, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Graco	0	4	3	0	2.43
Twin Disc	0	1	1	0	2.50

Graco currently has a consensus price target of $94.25, suggesting a potential upside of 17.07%. Given Graco’s higher possible upside, equities analysts clearly believe Graco is more favorable than Twin Disc.

Institutional and Insider Ownership

93.9% of Graco shares are owned by institutional investors. Comparatively, 65.3% of Twin Disc shares are owned by institutional investors. 2.2% of Graco shares are owned by company insiders. Comparatively, 22.1% of Twin Disc shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Graco has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, Twin Disc has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Dividends

Graco pays an annual dividend of $1.18 per share and has a dividend yield of 1.5%. Twin Disc pays an annual dividend of $0.16 per share and has a dividend yield of 0.9%. Graco pays out 38.4% of its earnings in the form of a dividend. Twin Disc pays out 10.7% 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. Graco has raised its dividend for 29 consecutive years. Graco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Graco beats Twin Disc on 14 of the 17 factors compared between the two stocks.

About Graco

Graco Inc. designs, manufactures, and markets systems and equipment used to move, measure, control, dispense, and spray fluid and powder materials worldwide. The Contractor segment offers sprayers to apply paint to walls and other structures; two-component proportioning systems that are used to spray polyurethane foam and polyurea coatings; and viscous coatings to roofs, as well as markings on roads, parking lots, athletic fields, and floors. The Industrial segment provides liquid finishing equipment, paint circulating and supply pumps, paint circulating advanced control systems, plural component coating proportioners, and accessories and spare parts; equipment that pumps, meters, mixes and dispenses sealant, adhesive, and composite materials; and gel-coat equipment, chop and wet-out systems, resin transfer molding systems and applicators, and precision dispensing solutions. It also offers powder finishing products to coat powder finishing on metals under the Gema and SAT brands. The Process segment provides pumps to move and dispense chemicals, water, wastewater, petroleum, food, lubricants, and other fluids; pressure valves used in the oil and natural gas industry, other industrial processes, and research facilities; and chemical injection pumping solutions for injection of chemicals into producing oil wells and pipelines. It also supplies pumps, hose reels, meters, valves, and accessories for fast oil change facilities, service garages, fleet service centers, automobile dealerships, auto parts stores, truck builders, and heavy equipment service centers; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators in industrial and commercial equipment, compressors, turbines, and on- and off-road vehicles. It sells its products through distributors, original equipment manufacturers, and home center channels, as well as to end-users. The company was incorporated in 1926 and is headquartered in Minneapolis, Minnesota.

About Twin Disc

Twin Disc, Incorporated engages in the design, manufacture, and sale of marine and heavy duty off-highway power transmission equipment in the United States, the Netherlands, China, Australia, Italy, and internationally. The company operates in two segments, Manufacturing and Distribution. Its principal products include marine transmissions, azimuth drives, surface drives, propellers, and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and controls systems. The company also provides third-party manufactured products. It sells its products through a direct sales force and distributor network to customers primarily in the pleasure craft, commercial marine, patrol, and military marine markets, as well as in the energy and natural resources, government, agriculture, recycling, construction, oil and gas, and industrial markets. The company was incorporated in 1918 and is headquartered in Milwaukee, Wisconsin.