Critical Contrast: Japan Steel Works (OTCMKTS:JPSWY) versus Graco (NYSE:GGG)

Japan Steel Works (OTCMKTS:JPSWY) and Graco (NYSE:GGG) are both industrials companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, dividends, valuation and earnings.

Dividends

Japan Steel Works pays an annual dividend of $0.22 per share and has a dividend yield of 0.7%. Graco pays an annual dividend of $1.10 per share and has a dividend yield of 1.3%. Japan Steel Works pays out 25.9% of its earnings in the form of a dividend. Graco pays out 39.0% 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.

Analyst Recommendations

This is a summary of recent ratings for Japan Steel Works and Graco, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Japan Steel Works	0	1	1	0	2.50
Graco	0	1	4	0	2.80

Graco has a consensus target price of $94.50, suggesting a potential upside of 11.50%. Given Graco’s stronger consensus rating and higher possible upside, analysts plainly believe Graco is more favorable than Japan Steel Works.

Volatility and Risk

Japan Steel Works has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Graco has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500.

Insider & Institutional Ownership

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

Profitability

This table compares Japan Steel Works and Graco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Japan Steel Works	6.95%	9.76%	4.84%
Graco	22.26%	19.05%	15.77%

Valuation and Earnings

This table compares Japan Steel Works and Graco”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Japan Steel Works	$1.63 billion	2.77	$118.54 million	$0.85	35.69
Graco	$2.11 billion	6.64	$486.08 million	$2.82	30.05

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

Summary

Graco beats Japan Steel Works on 15 of the 17 factors compared between the two stocks.

About Japan Steel Works

The Japan Steel Works, Ltd. engages in the provision of industrial machinery products, and material and engineering business in Japan and internationally. It operates through Industrial Machinery Products Business, and Material and Engineering Business segments. The Industrial Machinery Products Business segment offers plastic production and processing machinery, such as pelletizers, film and sheet manufacturing equipment, and twin-screw extruders; molding machines including plastic injection molding, magnesium injection molding, and blow molding machines; and other machinery consists of excimer laser annealing systems, defense equipment, railway products, hot press devices, vacuum laminators, and deposit systems, as well as after-sales services for plastics, mobility, high-performance batteries, electronic devices, and defense applications. The Material and Engineering Business segment provides steel casting and forgings, such as reactor and steam generator parts, rotor shafts, turbine casings, die steel, steel rolls for steel manufacturing, and clad steel plates; and engineering and other services, including design and analysis, welded structures, inspection and survey, and hydrogen pressure accumulators and related products for use in power generation equipment, renewable energy, and infrastructure applications. The company offers photonics, composite materials, and metallic materials for use in semiconductors and electronic devices, cameras and sensing devices, aircraft and mobility components, and electronic parts. The Japan Steel Works, Ltd. was founded in 1907 and is headquartered in Shinagawa, Japan.

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.