Franklin Electric (NASDAQ:FELE) and Wartsila (OTCMKTS:WRTBY) Critical Review

Franklin Electric (NASDAQ:FELE) and Wartsila (OTCMKTS:WRTBY) are both industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, analyst recommendations, valuation and risk.

Insider & Institutional Ownership

80.0% of Franklin Electric shares are owned by institutional investors. 2.7% of Franklin Electric shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Franklin Electric and Wartsila, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin Electric	0	1	0	0	2.00
Wartsila	1	2	0	0	1.67

Franklin Electric presently has a consensus target price of $107.00, indicating a potential upside of 12.64%. Given Franklin Electric’s stronger consensus rating and higher possible upside, analysts clearly believe Franklin Electric is more favorable than Wartsila.

Risk & Volatility

Franklin Electric has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500. Comparatively, Wartsila has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.

Profitability

This table compares Franklin Electric and Wartsila’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin Electric	8.71%	14.05%	9.47%
Wartsila	8.19%	22.76%	7.28%

Earnings & Valuation

This table compares Franklin Electric and Wartsila”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin Electric	$2.06 billion	2.05	$180.31 million	$3.87	24.55
Wartsila	$6.98 billion	2.59	$544.30 million	$0.20	30.50

Wartsila has higher revenue and earnings than Franklin Electric. Franklin Electric is trading at a lower price-to-earnings ratio than Wartsila, indicating that it is currently the more affordable of the two stocks.

Dividends

Franklin Electric pays an annual dividend of $1.06 per share and has a dividend yield of 1.1%. Wartsila pays an annual dividend of $0.03 per share and has a dividend yield of 0.5%. Franklin Electric pays out 27.4% of its earnings in the form of a dividend. Wartsila pays out 15.0% 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. Franklin Electric has raised its dividend for 33 consecutive years. Franklin Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Franklin Electric beats Wartsila on 9 of the 16 factors compared between the two stocks.

About Franklin Electric

Franklin Electric Co., Inc., together with its subsidiaries, designs, manufactures, and distributes water and fuel pumping systems worldwide. The company operates through Water Systems, Fueling Systems, and Distribution segments. The Water Systems segment offers submersible motors, drives, pumps, electronic controls, water treatment systems, monitoring devices, and related parts and equipment. Its motors and pumps are used principally for pumping clean water and wastewater in various residential, agricultural, municipal, and industrial applications; and manufactures electronic drives and controls that are used in motors for controlling functionality, as well as provides protection from various hazards, such as electrical surges, over-heating, and dry wells or tanks. The Fueling Systems segment provides pumps, pipes, sumps, fittings, vapor recovery components, electronic controls, monitoring devices, and related parts and equipment primarily for use in fueling system applications. This segment serves other energy markets, such as power reliability systems, as well as includes electronic devices for online monitoring of the power utility, hydroelectric, and telecommunication and data center infrastructure. The Distribution segment sells to and provides presale support and specifications to the installing contractors. It sells products produced by the Water Systems segment. The company sells its products to wholesale and retail distributors, specialty distributors, original equipment manufacturers, industrial and petroleum equipment distributors, and oil and utility companies through its employee sales force and independent manufacturing representatives. Franklin Electric Co., Inc. was founded in 1944 and is headquartered in Fort Wayne, Indiana.

About Wartsila

Wärtsilä Oyj Abp offers technologies and lifecycle solutions for the marine and energy markets worldwide. It offers engine power plant products, such as gas, multi-fuel, and diesel engines; GEMS Digital Energy Platform, a smart software platform that monitors, controls, and optimizes energy assets on site and portfolio levels; GridSolv Quantum, a fully integrated energy storage solution, which enables ease of deployment and sustainable energy optimization; GEMS Power Plant Controllers; GEMS Fleet Director, which provides centralized real-time visibility into a global fleet of power plants; and GEMS Grid Controller that conducts intelligent grid control and optimized power management for microgrids of various sizes. The company also provides GEMS smart energy management software platform to remotely monitor, operate, identify, and diagnose assets; lifecycle solutions for power plants; power and propulsion products, such as electric shipping and hybrid ships, engine and generating sets, propulsors and gears, and shaft line solutions; liquid and gas handling products, including ballast water management, freshwater generation, waste and wastewater treatment, gas solutions, and exhaust treatment equipment; port and fleet optimization; simulation and training solutions; and automation, navigation, and control systems. The company was founded in 1834 and is headquartered in Helsinki, Finland.