Reviewing Actuant Corporation (ATU) & Kaman Corporation (KAMN)

Actuant Corporation (NYSE: ATU) and Kaman Corporation (NYSE:KAMN) are both small-cap industrial products companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, profitability, risk, institutional ownership, analyst recommendations, earnings and dividends.

Insider and Institutional Ownership

93.7% of Kaman Corporation shares are held by institutional investors. 4.0% of Actuant Corporation shares are held by company insiders. Comparatively, 2.4% of Kaman Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Actuant Corporation and Kaman Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Actuant Corporation -6.04% 9.43% 3.39%
Kaman Corporation 2.95% 9.24% 3.73%

Dividends

Actuant Corporation pays an annual dividend of $0.04 per share and has a dividend yield of 0.2%. Kaman Corporation pays an annual dividend of $0.80 per share and has a dividend yield of 1.4%. Actuant Corporation pays out -3.6% of its earnings in the form of a dividend. Kaman Corporation pays out 43.2% 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. Kaman Corporation has increased its dividend for 2 consecutive years. Kaman Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Actuant Corporation and Kaman Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Actuant Corporation $1.10 billion 1.42 $124.87 million ($1.12) -23.35
Kaman Corporation $1.77 billion 0.88 $161.23 million $1.85 30.09

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

Analyst Recommendations

This is a summary of current ratings and price targets for Actuant Corporation and Kaman Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Actuant Corporation 1 7 4 0 2.25
Kaman Corporation 0 4 1 0 2.20

Actuant Corporation presently has a consensus price target of $25.44, indicating a potential downside of 2.70%. Kaman Corporation has a consensus price target of $56.67, indicating a potential upside of 1.81%. Given Kaman Corporation’s higher probable upside, analysts plainly believe Kaman Corporation is more favorable than Actuant Corporation.

Volatility and Risk

Actuant Corporation has a beta of 1.62, indicating that its stock price is 62% more volatile than the S&P 500. Comparatively, Kaman Corporation has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500.

Summary

Kaman Corporation beats Actuant Corporation on 9 of the 17 factors compared between the two stocks.

About Actuant Corporation

Actuant Corporation designs, manufactures and distributes a range of industrial products and systems to various end markets. The Company operates through three segments: Industrial, Energy and Engineered Solutions. The Company’s Industrial segment is primarily involved in the design, manufacture and distribution of branded hydraulic and mechanical tools to the maintenance, industrial, infrastructure and production automation markets. The Company’s Energy segment provides joint integrity products and services, customized offshore vessel mooring solutions, as well as rope and cable solutions to the global oil and gas, power generation and other energy markets. The Company’s Engineered Solutions segment provides engineered position and motion control systems to original equipment manufacturers (OEM) in various on and off-highway vehicle markets, as well as various other products to the industrial and agricultural markets.

About Kaman Corporation

Kaman Corporation conducts business in the aerospace and distribution markets. The Company operates through two segments: Distribution and Aerospace. The Company’s brands include KAflex, KAron and K-MAX. Distribution segment is a power transmission, motion control, and fluid power industrial distributor with operations throughout the United States. Distribution segment conducts business in the mechanical power transmission and bearings, electrical, automation and control, and fluid power product platforms and provides total solutions from system design and integration to machine parts and services to the national manufacturing industry. Aerospace segment produces and markets aircraft bearings and components; super precision, miniature ball bearings; metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft, and safe and arming solutions for missile and bomb systems for the United States and allied militaries.

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