Ryerson (NYSE:RYZ – Get Free Report) and Watsco (NYSE:WSO – Get Free Report) are both industrials companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.
Risk and Volatility
Ryerson has a beta of 1.65, indicating that its stock price is 65% more volatile than the S&P 500. Comparatively, Watsco has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.
Profitability
This table compares Ryerson and Watsco’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ryerson | -0.56% | -0.62% | -0.21% |
| Watsco | 6.53% | 14.40% | 10.17% |
Dividends
Earnings & Valuation
This table compares Ryerson and Watsco”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ryerson | $5.84 billion | 0.22 | -$56.40 million | ($1.24) | -20.34 |
| Watsco | $7.24 billion | 1.78 | $496.99 million | $11.53 | 27.02 |
Watsco has higher revenue and earnings than Ryerson. Ryerson is trading at a lower price-to-earnings ratio than Watsco, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of current ratings for Ryerson and Watsco, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ryerson | 2 | 1 | 0 | 0 | 1.33 |
| Watsco | 0 | 9 | 2 | 0 | 2.18 |
Watsco has a consensus target price of $395.50, indicating a potential upside of 26.94%. Given Watsco’s stronger consensus rating and higher possible upside, analysts clearly believe Watsco is more favorable than Ryerson.
Institutional and Insider Ownership
94.8% of Ryerson shares are held by institutional investors. Comparatively, 89.7% of Watsco shares are held by institutional investors. 6.6% of Ryerson shares are held by insiders. Comparatively, 12.9% of Watsco shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Summary
Watsco beats Ryerson on 14 of the 17 factors compared between the two stocks.
About Ryerson
Ryerson Holding Corporation, together with its subsidiaries, processes and distributes industrial metals in the United States, Canada, Mexico, and China. It offers a line of products in carbon steel, stainless steel, alloy steels, and aluminum, as well as nickel and red metals in various shapes and forms, including coils, sheets, rounds, hexagons, square and flat bars, plates, structural, and tubing. The company also provides various processing services, such as bending, beveling, blanking, blasting, burning, cutting-to-length, drilling, embossing, flattening, forming, grinding, laser cutting, machining, notching, painting, perforating, polishing, punching, rolling, sawing, scribing, shearing, slitting, stamping, tapping, threading, welding, or other techniques to process materials. It serves various industries, including commercial ground transportation, metal fabrication and machine shops, industrial machinery and equipment manufacturing, consumer durable equipment, HVAC manufacturing, construction equipment manufacturing, food processing and agricultural equipment manufacturing, and oil and gas. The company was founded in 1842 and is headquartered in Chicago, Illinois.
About Watsco
Watsco, Inc., together with its subsidiaries, engages in the distribution of air conditioning, heating, refrigeration equipment, and related parts and supplies in the United States and internationally. The company distributes equipment, including residential ducted and ductless air conditioners, such as gas, electric, and oil furnaces; commercial air conditioning and heating equipment systems; and other specialized equipment. It also offers parts comprising replacement compressors, evaporator coils, motors, and other component parts; and supplies, such as thermostats, insulation materials, refrigerants, ductworks, grills, registers, sheet metals, tools, copper tubing, concrete pads, tapes, adhesives, and other ancillary supplies, as well as plumbing and bathroom remodeling supplies. The company serves contractors and dealers that service the replacement and new construction markets for residential and light commercial central air conditioning, heating, and refrigeration systems. Watsco, Inc. was incorporated in 1956 and is headquartered in Miami, Florida.
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