Contrasting Simpson Manufacturing (NYSE:SSD) and Caesarstone (NASDAQ:CSTE)

Simpson Manufacturing (NYSE:SSD) and Caesarstone (NASDAQ:CSTE) are both construction companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, profitability, earnings, risk, institutional ownership and valuation.

Profitability

This table compares Simpson Manufacturing and Caesarstone’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Simpson Manufacturing	14.90%	18.11%	11.90%
Caesarstone	-14.77%	-16.14%	-7.93%

Dividends

Simpson Manufacturing pays an annual dividend of $1.16 per share and has a dividend yield of 0.7%. Caesarstone pays an annual dividend of $0.19 per share and has a dividend yield of 22.1%. Simpson Manufacturing pays out 14.1% of its earnings in the form of a dividend. Caesarstone pays out -9.4% 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. Simpson Manufacturing has increased its dividend for 11 consecutive years. Caesarstone is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

93.7% of Simpson Manufacturing shares are owned by institutional investors. Comparatively, 33.7% of Caesarstone shares are owned by institutional investors. 0.4% of Simpson Manufacturing shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Simpson Manufacturing and Caesarstone”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Simpson Manufacturing	$2.31 billion	2.92	$322.22 million	$8.21	19.79
Caesarstone	$400.66 million	0.07	-$42.83 million	($2.03)	-0.42

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

Volatility & Risk

Simpson Manufacturing has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500. Comparatively, Caesarstone has a beta of 0.2, suggesting that its stock price is 80% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Simpson Manufacturing and Caesarstone, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Simpson Manufacturing	0	2	1	0	2.33
Caesarstone	1	0	0	0	1.00

Simpson Manufacturing presently has a consensus price target of $201.00, indicating a potential upside of 23.68%. Given Simpson Manufacturing’s stronger consensus rating and higher possible upside, analysts clearly believe Simpson Manufacturing is more favorable than Caesarstone.

Summary

Simpson Manufacturing beats Caesarstone on 15 of the 17 factors compared between the two stocks.

About Simpson Manufacturing

Simpson Manufacturing Co., Inc., through its subsidiaries, designs, engineers, manufactures, and sells structural solutions for wood, concrete, and steel connections. The company offers wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls, and pre-fabricated lateral systems for use in light-frame construction; and concrete construction products comprising adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools, fiber-reinforced materials, and other repair products for use in concrete, masonry, and steel construction, as well as grouts, coatings, sealers, mortars, fiberglass and fiber-reinforced polymer systems, and asphalt products for use in concrete construction repair, and strengthening and protection products. It also provides connectors and lateral products for wood framing, timber and offsite construction, structural steel construction, and cold-formed steel applications; and mechanical and adhesive anchors for concrete and masonry construction applications. In addition, the company offers engineering and design services, as well as software solutions that facilitate the specification, selection, and use of its products. It markets its products to the residential construction, light industrial and commercial construction, infrastructure construction, remodeling, and do-it-yourself markets in the United States, Canada, France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands, Belgium, Spain, Italy, Romania, Sweden, Norway, Australia, New Zealand, China, Taiwan, and Vietnam. The company was founded in 1956 and is headquartered in Pleasanton, California.

About Caesarstone

Caesarstone Ltd., together with its subsidiaries, designs, develops, manufactures, and markets engineered stone and other materials under the Caesarstone brand in the United States, Canada, Latin America, Australia, Asia, Europe, the Middle East and Africa, and Israel. The company’s engineered stone slabs are primarily used as indoor and outdoor kitchen countertops in the renovation and remodeling, and residential construction sectors. Its products are also used in other applications, such as vanity tops, wall panels, back splashes, floor tiles, stairs, furniture, and other interior and exterior surfaces that are used in various residential and non-residential applications. The company also offers porcelain products under the Lioli brand for countertops, flooring, and cladding applications; sells natural stone, sinks, and various ancillary fabrication tools and materials; and resells natural stones, as well as various ancillaries, and fabrication and installation accessories, as well as provides fabrication and installation services. It sells its products directly to wholesalers, resellers, and fabricators; and through direct sales force and indirect network of independent distributors. The company was formerly known as Caesarstone Sdot Yam Ltd. and changed its name to Caesarstone Ltd. in June 2016. Caesarstone Ltd. was founded in 1987 and is headquartered in Menashe, Israel.