Head-To-Head Review: Ferguson (NYSE:FERG) vs. GATX (NYSE:GATX)

Ferguson (NYSE:FERG) and GATX (NYSE:GATX) are both industrials companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Volatility and Risk

Ferguson has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, GATX has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Earnings and Valuation

This table compares Ferguson and GATX”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ferguson	$31.32 billion	1.38	$1.86 billion	$8.51	26.24
GATX	$1.74 billion	3.47	$333.30 million	$10.10	16.96

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

Analyst Recommendations

This is a breakdown of recent recommendations for Ferguson and GATX, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ferguson	0	6	10	2	2.78
GATX	0	0	4	0	3.00

Ferguson currently has a consensus price target of $285.57, suggesting a potential upside of 27.87%. GATX has a consensus price target of $219.00, suggesting a potential upside of 27.86%. Given Ferguson’s higher possible upside, equities research analysts clearly believe Ferguson is more favorable than GATX.

Profitability

This table compares Ferguson and GATX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ferguson	6.82%	37.24%	12.31%
GATX	17.94%	10.43%	2.12%

Dividends

Ferguson pays an annual dividend of $3.56 per share and has a dividend yield of 1.6%. GATX pays an annual dividend of $2.64 per share and has a dividend yield of 1.5%. Ferguson pays out 41.8% of its earnings in the form of a dividend. GATX pays out 26.1% 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. GATX has increased its dividend for 15 consecutive years.

Institutional and Insider Ownership

82.0% of Ferguson shares are held by institutional investors. Comparatively, 93.1% of GATX shares are held by institutional investors. 0.2% of Ferguson shares are held by insiders. Comparatively, 1.9% of GATX 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.

About Ferguson

Ferguson Enterprises Inc. distributes plumbing and heating products in North America. The company provides expertise, solutions, and products, including infrastructure, plumbing, appliances, fire, and fabrication, as well as heating, ventilation, and air conditioning (HVAC) to residential and non-residential customers. It also supplies specialist water and wastewater treatment products to residential, commercial, and infrastructure contractors, as well as supplies pipe, valves, and fittings solutions to industrial customers. In addition, it offers customized solutions, such as virtual design, fabrication, valve actuation, pre-assembly, kitting, installation, and project management services, as well as after-sales support that comprises warranty, credit, project-based billing, returns and maintenance, and repair and operations support. The company sells its products through a network of distribution centers, branches, counter service and specialist sales associates, showroom consultants, and e-commerce channels. Ferguson Enterprises Inc. was founded in 1953 and is headquartered in Newport News, Virginia.

About GATX

GATX Corporation, together its subsidiaries, operates as railcar leasing company in the United States, Canada, Mexico, Europe, and India. It operates through three segments: Rail North America, Rail International, and Portfolio Management. The company leases tank and freight railcars, and locomotives for petroleum, chemical, food/agriculture, and transportation industries. It also offers maintenance services, including the interior cleaning of railcars, routine maintenance and repair of car body and safety appliances, regulatory compliance works, wheelset replacements, interior blast and lining, exterior blast and painting, and car stenciling services. In addition, the company manufactures commercial aircraft jet engines and leases aircraft spare engines; and owns and manages tank containers that are leased to chemical, industrial gas, energy, food, cryogenic and pharmaceutical industries, and tank container operators, as well as provides tank container sourcing, remarketing, and inspection and maintenance services. As of December 31, 2023, it owned and operated a fleet of approximately 148,500 railcars; 493 four-axle and 30 six-axle locomotives; 399 aircraft spare engines; and 23,931 tank containers. GATX Corporation was founded in 1898 and is headquartered in Chicago, Illinois.