NL Industries (NL) versus AZZ (AZZ) Critical Survey

NL Industries (NYSE: NL) and AZZ (NYSE:AZZ) are both small-cap basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, earnings, dividends and risk.

Institutional and Insider Ownership

9.4% of NL Industries shares are owned by institutional investors. Comparatively, 88.0% of AZZ shares are owned by institutional investors. 0.1% of NL Industries shares are owned by company insiders. Comparatively, 0.0% of AZZ shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares NL Industries and AZZ’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NL Industries $108.90 million 4.79 $15.32 million $1.58 6.77
AZZ $858.93 million 1.27 $60.92 million $1.97 21.35

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

Volatility & Risk

NL Industries has a beta of 2.64, indicating that its stock price is 164% more volatile than the S&P 500. Comparatively, AZZ has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500.

Profitability

This table compares NL Industries and AZZ’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NL Industries 67.61% 33.69% 17.82%
AZZ 6.27% 9.65% 5.13%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for NL Industries and AZZ, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NL Industries 1 0 0 0 1.00
AZZ 0 1 0 0 2.00

NL Industries currently has a consensus target price of $14.00, indicating a potential upside of 30.84%. AZZ has a consensus target price of $52.00, indicating a potential upside of 23.66%. Given NL Industries’ higher possible upside, research analysts plainly believe NL Industries is more favorable than AZZ.

Dividends

AZZ pays an annual dividend of $0.68 per share and has a dividend yield of 1.6%. NL Industries does not pay a dividend. AZZ pays out 34.5% of its earnings in the form of a dividend. AZZ has raised its dividend for 4 consecutive years.

About NL Industries

NL Industries, Inc. is a holding company. The Company operates in the component products industry through its subsidiary, CompX International Inc. (CompX). The Company operates in the chemicals industry through its non-controlling interest in Kronos Worldwide, Inc. (Kronos). The Company, through Compx, manufactures engineered components that are sold to a range of industries, including recreational transportation (including boats), postal, office and institutional furniture, cabinetry, tool storage, healthcare, gas stations and vending equipment. Kronos is a global producer and marketer of value-added titanium dioxide pigments (TiO2), a base industrial product used in imparting whiteness, brightness and opacity to a range of customer applications and end use markets, including coatings, plastics, paper, inks, food, cosmetics, and other industrial and consumer products. Kronos has production facilities in Europe and North America.

About AZZ

AZZ Inc. is a provider of galvanizing services, welding solutions, specialty electrical equipment and engineered services to the power generation, transmission, distribution, refining and industrial markets. The Company operates through two segments: Energy segment and Galvanizing segment. Its Energy segment provides products and services designed to support industrial, nuclear and electrical applications. Its product offerings include custom switchgear, electrical enclosures, medium and high voltage bus ducts, explosion proof and hazardous duty lighting, nuclear safety-related equipment and tubular products. Its Galvanizing segment provides hot dip galvanizing to the steel fabrication industry through facilities located throughout the United States and Canada. It serves fabricators or manufacturers that provide services to the electrical and telecommunications, bridge and highway, petrochemical and general industrial markets and various original equipment manufacturers.

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