Critical Comparison: Timken (NYSE:TKR) vs. Rockwell Automation (NYSE:ROK)

Timken (NYSE:TKR) and Rockwell Automation (NYSE:ROK) are both computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, earnings, analyst recommendations, valuation and risk.

Valuation & Earnings

This table compares Timken and Rockwell Automation”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Timken	$4.58 billion	1.94	$288.40 million	$4.40	29.08
Rockwell Automation	$8.34 billion	6.02	$869.00 million	$9.62	46.95

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

Profitability

This table compares Timken and Rockwell Automation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Timken	6.60%	11.84%	5.79%
Rockwell Automation	12.36%	37.54%	12.30%

Institutional and Insider Ownership

89.1% of Timken shares are held by institutional investors. Comparatively, 75.8% of Rockwell Automation shares are held by institutional investors. 8.1% of Timken shares are held by insiders. Comparatively, 0.8% of Rockwell Automation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Timken pays an annual dividend of $1.44 per share and has a dividend yield of 1.1%. Rockwell Automation pays an annual dividend of $5.52 per share and has a dividend yield of 1.2%. Timken pays out 32.7% of its earnings in the form of a dividend. Rockwell Automation pays out 57.4% 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. Timken has raised its dividend for 12 consecutive years and Rockwell Automation has raised its dividend for 15 consecutive years. Rockwell Automation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Timken and Rockwell Automation, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Timken	0	3	6	0	2.67
Rockwell Automation	0	10	9	1	2.55

Timken presently has a consensus price target of $139.13, suggesting a potential upside of 8.72%. Rockwell Automation has a consensus price target of $449.16, suggesting a potential downside of 0.55%. Given Timken’s stronger consensus rating and higher probable upside, equities analysts clearly believe Timken is more favorable than Rockwell Automation.

Risk and Volatility

Timken has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, Rockwell Automation has a beta of 1.56, suggesting that its stock price is 56% more volatile than the S&P 500.

Summary

Rockwell Automation beats Timken on 13 of the 18 factors compared between the two stocks.

About Timken

The Timken Company designs, manufactures, and sells engineered bearings and industrial motion products, and related services in the United States and internationally. The company's Engineered Bearings segment provides various bearing products, including tapered, spherical, and cylindrical roller bearings; plain bearings, metal-polymer bearings, and rod end bearings; radial, angular, and precision ball bearings; thrust and specialty ball bearings; journal bearings; and housed or mounted bearings. This segment serves wind energy, agriculture, construction, food and beverage, metals and mining, automotive and truck, aerospace, rail, and other industries under the Timken, GGB, and Fafnir brands. Its Industrial Motion segment offers a portfolio of engineered products comprising industrial drives, automatic lubrication systems, linear motion products and systems, chains, belts, seals, couplings, filtration systems, and industrial clutches and brakes. It also provides industrial drivetrain and bearing repairing services. This segment serves a range of industries, such as solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical, and others under the Philadelphia Gear, Cone Drive, Rollon, Nadella, Groeneveld, BEKA, Diamond, Drives, Timken Belts, Spinea, Des-Case, Lagersmit, Lovejoy, and PT Tech brands. The Timken Company was founded in 1899 and is headquartered in North Canton, Ohio.

About Rockwell Automation

Rockwell Automation, Inc. provides industrial automation and digital transformation solutions in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company operates through three segments, Intelligent Devices, Software & Control, and Lifecycle Services. Its solutions include hardware and software products and services. The Intelligent Devices segment offers drives, motion, safety, sensing, industrial components, and configured-to-order products. The Software & Control segment provides control and visualization software and hardware, information software, and network and security infrastructure solutions. The Lifecycle Services segment provides consulting, professional services and solutions, and connected and maintenance services. The company sells its solutions primarily through independent distributors in relation with its direct sales force. It serves discrete end markets, including automotive, semiconductor, and warehousing and logistics, as well as general industries comprising printing and publishing, marine, glass, fiber and textiles, airports, and aerospace; hybrid end markets, such as food and beverage, life sciences, household and personal care, and tire, as well as eco industrial, including water/wastewater, waste management, mass transit, and renewable energy; and process end markets comprising oil and gas, mining, metals, chemicals, pulp and paper, and others. Rockwell Automation, Inc. was founded in 1903 and is headquartered in Milwaukee, Wisconsin.