Financial Survey: Friedman Industries (NASDAQ:FRD) versus ESAB (NYSE:ESAB)

Friedman Industries (NASDAQ:FRD) and ESAB (NYSE:ESAB) are both industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Friedman Industries	1.84%	6.50%	3.95%
ESAB	8.70%	15.93%	7.29%

Analyst Ratings

This is a breakdown of current recommendations for Friedman Industries and ESAB, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Friedman Industries	0	1	0	0	2.00
ESAB	0	2	8	0	2.80

ESAB has a consensus target price of $143.33, indicating a potential upside of 22.83%. Given ESAB’s stronger consensus rating and higher probable upside, analysts clearly believe ESAB is more favorable than Friedman Industries.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Friedman Industries	$464.83 million	0.32	$6.09 million	$1.20	17.70
ESAB	$2.79 billion	2.54	$264.84 million	$3.97	29.39

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

Dividends

Friedman Industries pays an annual dividend of $0.16 per share and has a dividend yield of 0.8%. ESAB pays an annual dividend of $0.40 per share and has a dividend yield of 0.3%. Friedman Industries pays out 13.3% of its earnings in the form of a dividend. ESAB pays out 10.1% 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. Friedman Industries has raised its dividend for 1 consecutive years and ESAB has raised its dividend for 3 consecutive years.

Institutional and Insider Ownership

33.3% of Friedman Industries shares are owned by institutional investors. Comparatively, 91.1% of ESAB shares are owned by institutional investors. 5.5% of Friedman Industries shares are owned by company insiders. Comparatively, 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 stock is poised for long-term growth.

Volatility and Risk

Friedman Industries has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500. Comparatively, ESAB has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500.

Summary

ESAB beats Friedman Industries on 15 of the 17 factors compared between the two stocks.

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.

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.