Handy & Harman (NASDAQ: HNH) and Timken Steel Corporation (NYSE:TMST) are both small-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, earnings, profitability, valuation and institutional ownership.

Profitability

This table compares Handy & Harman and Timken Steel Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Handy & Harman 5.07% 27.77% 6.04%
Timken Steel Corporation -6.39% -12.92% -6.82%

Risk & Volatility

Handy & Harman has a beta of 1.4, suggesting that its share price is 40% more volatile than the S&P 500. Comparatively, Timken Steel Corporation has a beta of 2.3, suggesting that its share price is 130% more volatile than the S&P 500.

Earnings and Valuation

This table compares Handy & Harman and Timken Steel Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Handy & Harman $957.45 million 0.39 $110.27 million $0.71 42.68
Timken Steel Corporation $1.08 billion 0.58 -$29.80 million ($1.74) -8.05

Handy & Harman has higher revenue, but lower earnings than Timken Steel Corporation. Timken Steel Corporation is trading at a lower price-to-earnings ratio than Handy & Harman, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

88.2% of Handy & Harman shares are owned by institutional investors. Comparatively, 75.7% of Timken Steel Corporation shares are owned by institutional investors. 6.1% of Handy & Harman shares are owned by insiders. Comparatively, 8.1% of Timken Steel Corporation shares are owned 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.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Handy & Harman and Timken Steel Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Handy & Harman 0 0 0 0 N/A
Timken Steel Corporation 0 3 1 0 2.25

Timken Steel Corporation has a consensus price target of $19.33, suggesting a potential upside of 38.10%. Given Timken Steel Corporation’s higher possible upside, analysts clearly believe Timken Steel Corporation is more favorable than Handy & Harman.

About Handy & Harman

Handy & Harman Ltd. is a holding company. The Company, through its subsidiaries, is a diversified manufacturer of engineered industrial products. The Company’s segments include Joining Materials, Tubing, Building Materials, Performance Materials, Electrical Products, and Kasco Blades and Route Repair Services (Kasco). Joining Materials fabricates precious metals and their alloys into brazing alloys. Tubing manufactures a range of steel tubing products. Building Materials manufactures and supplies products to the commercial construction and building industries. Performance Materials manufactures sheet and mechanically formed glass manufactures sheet and mechanically formed glass, quartz, carbon and aramid materials. Electrical Products segment designs, manufactures and markets power electronics and power protection, among others. Kasco provides meat-room blade products, repair services and resale products for the meat and deli departments of supermarkets and restaurants, among others.

About Timken Steel Corporation

TimkenSteel Corporation manufactures alloy steel, as well as carbon and micro-alloy steel. The Company’s portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing and precision steel components. In addition, the Company supplies machining and thermal treatment services, as well as manage raw material recycling programs, which are used as a feeder system for its melt operations. The Company’s products include SBQ Steel and Seamless Mechanical Steel Tubing, and Value-added Precision Products and Services. Its focus is on alloy steel. The Company manufactures carbon, micro-alloy and alloy steel, sold as ingots, bars and tubes. In addition to its customized steels, the Company also manufactures custom-make precision components. Its products and services are used in a range of demanding applications in the market sectors, such as oil and gas, industrial equipment, mining and power generation.

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