Comparing AB SKF (OTCMKTS:SKFRY) and ESAB (NYSE:ESAB)

AB SKF (OTCMKTS:SKFRY) and ESAB (NYSE:ESAB) are both industrials companies, but which is the better business? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, analyst recommendations, valuation and institutional ownership.

Dividends

AB SKF pays an annual dividend of $0.73 per share and has a dividend yield of 2.7%. ESAB pays an annual dividend of $0.40 per share and has a dividend yield of 0.3%. AB SKF pays out 64.6% of its earnings in the form of a dividend. ESAB pays out 9.6% 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. ESAB has increased its dividend for 3 consecutive years.

Earnings & Valuation

This table compares AB SKF and ESAB”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AB SKF	$9.34 billion	1.32	$612.44 million	$1.13	23.92
ESAB	$2.74 billion	2.69	$264.84 million	$4.18	29.08

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

Volatility and Risk

AB SKF has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500. Comparatively, ESAB has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500.

Profitability

This table compares AB SKF and ESAB’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AB SKF	5.54%	14.26%	7.30%
ESAB	9.36%	16.32%	7.54%

Analyst Recommendations

This is a summary of recent recommendations for AB SKF and ESAB, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AB SKF	0	1	0	1	3.00
ESAB	0	2	8	0	2.80

ESAB has a consensus price target of $143.11, indicating a potential upside of 17.75%. Given ESAB’s higher possible upside, analysts plainly believe ESAB is more favorable than AB SKF.

Institutional & Insider Ownership

0.1% of AB SKF shares are owned by institutional investors. Comparatively, 91.1% of ESAB shares are owned by institutional investors. 7.3% of ESAB shares are owned by company 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

ESAB beats AB SKF on 13 of the 18 factors compared between the two stocks.

About AB SKF

AB SKF (publ) designs, manufactures, and sells bearings and units, seals, lubrication systems, condition monitoring, and services worldwide. It operates in two segments, Industrial and Automotive. The company offers rolling, mounted and housings, super-precision, slewing, plain, magnetic, and thin section bearings; industrial and automotive seals; lubricants, manual lubrication tools, lubricators, automatic lubrication systems, and lubrication system components; maintenance products, such as hydraulic, mechanical, and alignment tools, as well as heaters; belts, pulleys, chains, sprockets, bushings and hubs, couplings, and bolts and tightening systems; condition monitoring systems; test and measuring equipment, such as waviness and roundness analyzers, noise and vibration testers, and grease test rigs, as well as calibration with traceability, machine training and support, and upgrades and refurbishment services; and vehicle aftermarket products. It also provides application engineering services consisting of technical consultancy, numerical simulation and design, and root cause analysis; asset management services, such as assessment and benchmarking, maintenance strategy review, spare parts and inventory management, and lubrication management; condition-based maintenance, including vibration analysis and diagnostics, thermography, lubrication analysis, and condition monitoring system installation; mechanical maintenance comprising mounting and dismounting, precision alignment, and balancing; remanufacturing and customization; and training solutions, which include instructor-led training, e-learning courses, and webinar recordings. The company serves the aerospace, agriculture, automotive, construction, food and beverage, general machinery, machine tools, marine, material handling, metals, mining, mineral processing, ocean energy, pulp and paper, railways, and wind industries. AB SKF (publ) was incorporated in 1907 and is headquartered in Gothenburg, Sweden.

About ESAB

ESAB Corporation engages in the formulation, development, manufacture, and supply of consumable products and equipment for use in cutting, joining, automated welding, and gas control equipment. Its comprehensive range of welding consumables includes electrodes, cored and solid wires, and fluxes using a range of specialty and other materials; and cutting consumables comprising electrodes, nozzles, shields, and tips. The company's equipment ranges from portable welding machines to large customized automated cutting and welding systems. It also offers a range of software and digital solutions to help its customers increase their productivity, remotely monitor their welding operations, and digitize their documentation. The company sells its products under the ESAB brand to various end markets, such as general industry, infrastructure, renewable energy, medical and life sciences, transportation, construction, and energy. It offers its products through independent distributors and direct salespeople. The company operates in North America, South America, Europe, the Middle East, India, Africa, and the Asia Pacific. ESAB Corporation was founded in 1904 and is headquartered in North Bethesda, Maryland.