Pentair (NYSE:PNR) versus Sims Metal Management (OTCMKTS:SMSMY) Critical Comparison

Pentair (NYSE:PNR) and Sims Metal Management (OTCMKTS:SMSMY) are both business services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.

Dividends

Pentair pays an annual dividend of $1.08 per share and has a dividend yield of 1.2%. Sims Metal Management pays an annual dividend of $0.16 per share and has a dividend yield of 1.1%. Pentair pays out 27.3% of its earnings in the form of a dividend. Pentair has raised its dividend for 7 consecutive years. Pentair 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 and recommmendations for Pentair and Sims Metal Management, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pentair	3	3	10	0	2.44
Sims Metal Management	0	1	1	0	2.50

Pentair currently has a consensus target price of $111.87, suggesting a potential upside of 22.75%. Given Pentair’s higher probable upside, research analysts clearly believe Pentair is more favorable than Sims Metal Management.

Profitability

This table compares Pentair and Sims Metal Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pentair	15.66%	21.79%	12.14%
Sims Metal Management	N/A	N/A	N/A

Valuation and Earnings

This table compares Pentair and Sims Metal Management”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pentair	$4.18 billion	3.53	$653.80 million	$3.96	23.01
Sims Metal Management	$4.85 billion	0.57	-$12.30 million	N/A	N/A

Pentair has higher earnings, but lower revenue than Sims Metal Management.

Risk and Volatility

Pentair has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500. Comparatively, Sims Metal Management has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Insider and Institutional Ownership

92.4% of Pentair shares are owned by institutional investors. 1.3% of Pentair shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Pentair beats Sims Metal Management on 12 of the 15 factors compared between the two stocks.

About Pentair

Pentair plc provides various water solutions in the United States, Western Europe, China, Eastern Europe, Latin America, the Middle East, Southeast Asia, Australia, Canada, and Japan. The company operates through three segments: Flow, Water Solutions, and Pool. The Flow segment designs, manufactures, and sells fluid treatment and pump products and systems, including pressure vessels, gas recovery solutions, membrane bioreactors, wastewater reuse systems and advanced membrane filtration, separation systems, water disposal pumps, water supply pumps, fluid transfer pumps, turbine pumps, solid handling pumps, and agricultural spray nozzles for fluid delivery, ion exchange, desalination, food and beverage, separation technologies in the oil and gas industry, residential and municipal wells, water treatment, wastewater solids handling, pressure boosting, circulation and transfer, fire suppression, flood control, agricultural irrigation, and crop spray in residential, commercial, and industrial markets. The Water Solutions segment provides commercial and residential water treatment products and systems, including pressure tanks, control valves, activated carbon products, commercial ice machines, conventional filtration products, and point-of-entry and point-of-use water treatment systems, as well as installation and preventative services for use in residential whole home water filtration, drinking water filtration, and water softening solutions, as well as commercial total water management and filtration in foodservice operations. The Pool segment provides residential and commercial pool equipment and accessories comprising pumps, filters, heaters, lights, automatic controls, automatic cleaners, maintenance equipment, and pool accessories for applications in residential and commercial pool maintenance, pool repair, renovation, service, and construction and aquaculture solutions. Pentair plc was founded in 1966 and is headquartered in London, the United Kingdom.

About Sims Metal Management

Sims Limited engages in buying, processing, and selling ferrous and non-ferrous recycled metals in Australia, Bangladesh, China, Turkey, the United States, and internationally. The company operates through six segments: North America Metals, Investment in SA Recycling, Australia/New Zealand Metals, UK Metals, Global Trading, and Sims Lifecycle Services. It is involved in the collection, processing, and trading of iron and steel secondary raw materials; and other metal alloys and residues, principally aluminum, lead, copper, zinc, and nickel bearing materials. The company also engages in the provision of environmentally responsible solutions for the disposal of post-consumer electronic products, such as information technology assets recycled for commercial customers; and environmentally responsible recycling of negative value materials, including electronic equipment. In addition, it provides secondary processing and other services comprising recycling of municipal curbside materials, stevedoring, and other sources of service. The company was founded in 1917 and is headquartered in Mascot, Australia.