Flowserve (NYSE:FLS – Get Free Report) and PACCAR (NASDAQ:PCAR – Get Free Report) are both large-cap industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.
Insider and Institutional Ownership
93.9% of Flowserve shares are held by institutional investors. Comparatively, 64.9% of PACCAR shares are held by institutional investors. 0.7% of Flowserve shares are held by company insiders. Comparatively, 2.0% of PACCAR 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.
Earnings and Valuation
This table compares Flowserve and PACCAR”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Flowserve | $4.73 billion | 2.13 | $346.25 million | $2.85 | 27.84 |
| PACCAR | $28.44 billion | 2.42 | $2.38 billion | $4.76 | 27.53 |
PACCAR has higher revenue and earnings than Flowserve. PACCAR is trading at a lower price-to-earnings ratio than Flowserve, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Flowserve has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500. Comparatively, PACCAR has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500.
Profitability
This table compares Flowserve and PACCAR’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Flowserve | 8.01% | 21.42% | 8.34% |
| PACCAR | 9.00% | 12.73% | 5.69% |
Analyst Ratings
This is a summary of recent ratings and target prices for Flowserve and PACCAR, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Flowserve | 0 | 4 | 7 | 0 | 2.64 |
| PACCAR | 0 | 11 | 2 | 0 | 2.15 |
Flowserve currently has a consensus price target of $86.60, indicating a potential upside of 9.16%. PACCAR has a consensus price target of $131.70, indicating a potential upside of 0.51%. Given Flowserve’s stronger consensus rating and higher possible upside, equities analysts plainly believe Flowserve is more favorable than PACCAR.
Dividends
Flowserve pays an annual dividend of $0.88 per share and has a dividend yield of 1.1%. PACCAR pays an annual dividend of $1.40 per share and has a dividend yield of 1.1%. Flowserve pays out 30.9% of its earnings in the form of a dividend. PACCAR pays out 29.4% 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. Flowserve has increased its dividend for 1 consecutive years and PACCAR has increased its dividend for 5 consecutive years.
Summary
Flowserve beats PACCAR on 9 of the 17 factors compared between the two stocks.
About Flowserve
Flowserve Corporation designs, manufactures, distributes, and services industrial flow management equipment in the United States, Canada, Mexico, Europe, the Middle East, Africa, and the Asia Pacific. It operates through Flowserve Pump Division (FPD) and Flow Control Division (FCD) segments. The FPD segment offers custom and pre-configured pumps and pump systems, mechanical seals, auxiliary systems, replacement parts, upgrades, and related aftermarket services; and equipment services, including installation and commissioning services, seal systems spare parts, repairs, advanced diagnostics, re-rate and upgrade solutions, retrofit programs, and machining and asset management solutions, as well as manufactures a gas-lubricated mechanical seal for use in high-speed compressors for gas pipelines and in the oil and gas production and process markets. The FCD segment provides engineered and industrial valve and automation systems, including isolation and control valves, actuation, controls, and related equipment; and equipment maintenance services for flow control systems, including advanced diagnostics, repair, installation, commissioning, retrofit programs, and field machining capabilities. This segment's products are used to control, direct, and manage the flow of liquids, gases, and multi-phase fluids. It primarily serves oil and gas, chemical and pharmaceuticals, power generation, and water management markets, as well as general industries, including mining and ore processing, pulp and paper, food and beverage, and other smaller applications. The company distributes its products through direct sales, distributors, and sales representatives. Flowserve Corporation was founded in 1790 and is headquartered in Irving, Texas.
About PACCAR
PACCAR Inc designs, manufactures, and distributes light, medium, and heavy-duty commercial trucks in the United States, Canada, Europe, Mexico, South America, Australia, and internationally. It operates through three segments: Truck, Parts, and Financial Services. The Truck segment designs, manufactures, and distributes trucks for the over-the-road and off-highway hauling of commercial and consumer goods. It sells its trucks through a network of independent dealers under the Kenworth, Peterbilt, and DAF nameplates. The Parts segment distributes aftermarket parts for trucks and related commercial vehicles. The Financial Services segment conducts full-service leasing operations under the PacLease trade name, as well as provides finance and leasing products and services to customers and dealers. This segment also offers equipment financing and administrative support services for its franchisees; retail loan and leasing services for small, medium, and large commercial trucking companies, as well as independent owners/operators and other businesses; and truck inventory financing services to independent dealers. In addition, this segment offers loans and leases directly to customers for the acquisition of trucks and related equipment. The company also manufactures and markets industrial winches under the Braden, Carco, and Gearmatic nameplates. PACCAR Inc was founded in 1905 and is headquartered in Bellevue, Washington.
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