Head-To-Head Comparison: IHI (OTCMKTS:IHICY) and Kennametal (NYSE:KMT)

IHI (OTCMKTS:IHICY) and Kennametal (NYSE:KMT) are both industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, risk, profitability, analyst recommendations, valuation, earnings and dividends.

Analyst Recommendations

This is a summary of current ratings and target prices for IHI and Kennametal, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
IHI	0	2	0	0	2.00
Kennametal	4	3	1	1	1.89

Kennametal has a consensus target price of $33.50, suggesting a potential upside of 7.13%. Given Kennametal’s higher possible upside, analysts plainly believe Kennametal is more favorable than IHI.

Risk and Volatility

IHI has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, Kennametal has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500.

Profitability

This table compares IHI and Kennametal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
IHI	N/A	N/A	N/A
Kennametal	14.53%	24.83%	12.84%

Earnings & Valuation

This table compares IHI and Kennametal”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
IHI	$10.92 billion	1.60	$1.06 billion	$1.03	15.71
Kennametal	$2.36 billion	1.01	$342.39 million	$4.40	7.11

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

Dividends

IHI pays an annual dividend of $0.07 per share and has a dividend yield of 0.4%. Kennametal pays an annual dividend of $0.80 per share and has a dividend yield of 2.6%. IHI pays out 6.8% of its earnings in the form of a dividend. Kennametal pays out 18.2% 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

Kennametal beats IHI on 9 of the 14 factors compared between the two stocks.

About IHI

IHI Corporation designs and builds engineering solutions in Japan and internationally. The company operates through four segments: Resources, Energy and Environment; Social Infrastructure; Industrial Systems and General-Purpose Machinery; and Aero Engine, Space and Defense. The company engages in the manufacturing, sale, and provision of services related to power systems plants for land use and power systems for chips; carbon solutions comprising boilers and storage facilities; components for nuclear power plants; bridges and water gates, transport systems, shield systems, and concrete construction materials; vehicular turbochargers, parking, heat treatment and surface engineering; transport machineries; logistics and industrial systems; and rotating machineries comprising compressors, separation systems, and turbochargers for ships. It also offers 3D laser radars, X-ray inspection systems, monitoring equipment, oil leak monitors, vibration control systems and seismic isolation floor systems, and disaster prevention equipment; environmental monitoring; cryogenic products, material handling systems, steelmaking equipment, pulp and paper machinery, agricultural machinery, life associated equipment; aero engines; rocket, space utilization, defense, and traffic control systems; and communication, electronic, electric measuring, information processing machines, and other instruments and equipment. In addition, the company sells and rents real estate. The company was formerly known as Ishikawajima-Harima Heavy Industries Co., Ltd and changed its name to IHI Corporation in 2007. IHI Corporation was founded in 1853 and is headquartered in Tokyo, Japan.

About Kennametal

Kennametal Inc. engages in development and application of tungsten carbides, ceramics, and super-hard materials and solutions for use in metal cutting and extreme wear applications to enable customers work against corrosion and high temperatures conditions worldwide. The company operates through two segments, Metal Cutting and Infrastructure. It offers standard and custom products, including turning, milling, hole making, tooling systems, and services, as well as specialized wear components and metallurgical powders for manufacturers engaged in various industries, such as the manufacturers of transportation vehicles and components, machine tools, and light and heavy machinery; airframe and aerospace components; and energy-related components for the oil and gas industry, as well as power generation. In addition, the company provides specified product design, selection, application, and support services; and standard and custom metal cutting solutions to aerospace, general engineering, energy, and transportation customers. Further, it produces compacts, nozzles, frac seats, and custom components used in oil and gas, and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling, and road milling; tungsten carbide powders for the oil and gas, aerospace, and process industries; and ceramics used by the packaging industry for metallization of films and papers. The company provides its products under the Kennametal, WIDIA, WIDIA Hanita, and WIDIA GTD brands through its direct sales force; a network of independent and national distributors; integrated supplier channels; and through the Internet. The company was founded in 1938 and is based in Pittsburgh, Pennsylvania.