Simpson Manufacturing (NYSE:SSD) versus A. O. Smith (NYSE:AOS) Head to Head Survey

Simpson Manufacturing (NYSE:SSD) and A. O. Smith (NYSE:AOS) are both mid-cap industrials companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, earnings, valuation and dividends.

Institutional and Insider Ownership

93.7% of Simpson Manufacturing shares are held by institutional investors. Comparatively, 76.1% of A. O. Smith shares are held by institutional investors. 0.3% of Simpson Manufacturing shares are held by insiders. Comparatively, 0.5% of A. O. Smith shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Simpson Manufacturing has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500. Comparatively, A. O. Smith has a beta of 1.12, indicating that its share price is 12% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Simpson Manufacturing and A. O. Smith, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Simpson Manufacturing	1	2	3	0	2.33
A. O. Smith	2	7	1	0	1.90

Simpson Manufacturing presently has a consensus price target of $216.25, indicating a potential upside of 17.93%. A. O. Smith has a consensus price target of $66.00, indicating a potential upside of 9.21%. Given Simpson Manufacturing’s stronger consensus rating and higher possible upside, analysts plainly believe Simpson Manufacturing is more favorable than A. O. Smith.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Simpson Manufacturing	15.65%	18.45%	12.32%
A. O. Smith	13.15%	27.88%	15.21%

Dividends

Simpson Manufacturing pays an annual dividend of $1.20 per share and has a dividend yield of 0.7%. A. O. Smith pays an annual dividend of $1.44 per share and has a dividend yield of 2.4%. Simpson Manufacturing pays out 13.1% of its earnings in the form of a dividend. A. O. Smith pays out 40.0% 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 raised its dividend for 11 consecutive years and A. O. Smith has raised its dividend for 31 consecutive years. A. O. Smith is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Simpson Manufacturing and A. O. Smith”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Simpson Manufacturing	$2.33 billion	3.23	$345.08 million	$9.15	20.04
A. O. Smith	$3.83 billion	2.14	$546.20 million	$3.60	16.79

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

Summary

Simpson Manufacturing beats A. O. Smith on 10 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 A. O. Smith

A. O. Smith Corporation manufactures and markets residential and commercial gas and electric water heaters, boilers, heat pumps, tanks, and water treatment products in North America, China, Europe, and India. The company offers water heaters for residences, restaurants, hotels, office buildings, laundries, car washes, and small businesses; boilers for hospitals, schools, hotels, and other large commercial buildings, as well as homes, apartments, and condominiums; and water treatment products comprising point-of-entry water softeners, well water solutions, and whole-home water filtration products, and point-of-use carbon and reverse osmosis products for residences, restaurants, hotels, and offices. It also provides commercial water treatment and filtration product; expansion tanks, commercial solar water heating systems, swimming pool and spa heaters, and related products and parts; and electric wall-hung, gas tankless, combi-boiler, and heat pump and solar water heaters. The company offers its products under the A. O. Smith, State, Lochinvar, Hague, Water-Right, Master Water, Atlantic Filter, and Water Tec brands. It distributes its products through independent wholesale plumbing distributors, as well as to retail channels consisting of hardware and home center chains, and manufacturer representative firms; and offers Aquasana branded products directly to consumers through e-commerce channels. A. O. Smith Corporation was founded in 1874 and is headquartered in Milwaukee, Wisconsin.