Comparing Friedman Industries (NASDAQ:FRD) and NN (NASDAQ:NNBR)

NN (NASDAQ:NNBR) and Friedman Industries (NASDAQ:FRD) are both small-cap industrials companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Institutional and Insider Ownership

53.9% of NN shares are owned by institutional investors. Comparatively, 33.3% of Friedman Industries shares are owned by institutional investors. 7.9% of NN shares are owned by company insiders. Comparatively, 5.5% of Friedman Industries shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for NN and Friedman Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NN	0	0	0	1	4.00
Friedman Industries	0	0	0	0	0.00

NN currently has a consensus price target of $4.00, suggesting a potential upside of 73.91%. Given NN’s stronger consensus rating and higher possible upside, research analysts plainly believe NN is more favorable than Friedman Industries.

Volatility & Risk

NN has a beta of 2.03, indicating that its share price is 103% more volatile than the S&P 500. Comparatively, Friedman Industries has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500.

Earnings and Valuation

This table compares NN and Friedman Industries”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NN	$464.29 million	0.25	-$38.27 million	($1.13)	-2.04
Friedman Industries	$444.60 million	0.27	$6.09 million	$1.20	14.10

Friedman Industries has lower revenue, but higher earnings than NN. NN is trading at a lower price-to-earnings ratio than Friedman Industries, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares NN and Friedman Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NN	-8.84%	-5.29%	-0.88%
Friedman Industries	1.84%	6.50%	3.95%

About NN

NN, Inc., together with its subsidiaries, designs, manufactures, and sells high-precision components and assemblies for various end markets in the United States and internationally. It operates through two segments, Mobile Solutions and Power Solutions. The Mobile Solutions segment manufactures and sells system critical components for automotive, general industrial, and medical end markets for use in power steering, braking, transmissions, gasoline fuel system, diesel injection, and diesel emissions treatment applications, as well as in heating, ventilation, and air conditioning. The Power Solutions segment designs, manufactures, and sells a range of high-precision metal and plastic components, assemblies, and finished devices used in various applications, such as power control and transportation electrification. Its products include electrical contacts, connectors, contact assemblies, and precision stampings for the electrical, general industrial, automotive, aerospace and defense, and medical end markets. This segment also produces various tools and instruments for the orthopaedics and medical/surgical end markets. NN, Inc. was founded in 1980 and is headquartered in Charlotte, North Carolina.

About Friedman Industries

Friedman Industries, Incorporated engages in steel processing, pipe manufacturing and processing, and the steel and pipe distribution businesses the United States. It operates in two segments, Coil and Tubular. The Coil segment is involved in the conversion of steel coils into flat sheet and plate steel cut to customer specifications and reselling steel coils. This segment also processes customer-owned coils on a fee basis. The company sells coil products and processing services to approximately 200 customers located primarily in the midwestern, southwestern and southeastern regions of the United States. Its principal customers for these products and services are steel distributors and customers manufacturing steel products, such as steel buildings, railroad cars, barges, tanks and containers, trailers, component parts and other fabricated steel products. The Tubular segment manufactures line and oil country pipes, as well as pipes for structural applications. This segment sells its tubular products principally to steel and pipe distributors through its own sales force. The company was incorporated in 1965 and is headquartered in Longview, Texas.