Reviewing Timken (NYSE:TKR) and Komatsu (OTCMKTS:KMTUY)

Timken (NYSE:TKR) and Komatsu (OTCMKTS:KMTUY) are both industrials companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, valuation, risk and earnings.

Insider & Institutional Ownership

89.1% of Timken shares are owned by institutional investors. Comparatively, 0.2% of Komatsu shares are owned by institutional investors. 8.1% of Timken shares are owned by insiders. Comparatively, 2.9% of Komatsu shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Timken	5.88%	13.13%	6.52%
Komatsu	8.92%	10.56%	5.94%

Volatility & Risk

Timken has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500. Comparatively, Komatsu has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Timken and Komatsu, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Timken	0	3	7	0	2.70
Komatsu	0	1	0	2	3.33

Timken currently has a consensus target price of $141.90, suggesting a potential upside of 30.04%. Given Timken’s higher probable upside, analysts plainly believe Timken is more favorable than Komatsu.

Dividends

Timken pays an annual dividend of $1.44 per share and has a dividend yield of 1.3%. Komatsu pays an annual dividend of $0.89 per share and has a dividend yield of 2.3%. Timken pays out 35.6% of its earnings in the form of a dividend. Komatsu pays out 32.0% 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. Timken has raised its dividend for 12 consecutive years. Komatsu is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Timken	$4.58 billion	1.65	$288.40 million	$4.04	27.01
Komatsu	$27.45 billion	1.30	$2.48 billion	$2.78	13.76

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

Summary

Timken beats Komatsu on 11 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 Komatsu

Komatsu Ltd. manufactures and sells construction, mining, and utility equipment in Japan, the Americas, Europe, China, Rest of Asia, Oceania, the Middle East, Africa, and CIS countries. It operates through three segments: Construction, Mining and Utility Equipment; Retail Finance; and Industrial Machinery and Others. The company offers construction and mining equipment, including excavators, wheel loaders, bulldozers, motor graders, dump truck, rope and hybrid shovels, electric wheel loaders, continuous miners, and jumbo drills. It also provides forestry equipment, including harvesters, forwarders, feller bunchers, excavators, mini excavators, and forklifts; demolition, waste, and recycling equipment, such as mobile crushers, hydraulic excavators, wheel loaders, and mini shovels; material handling equipment; and tunnel-boring machines, pipe layers, towing tractors, and engines. In addition, the company offers industrial machinery, including presses, sheet-metal machinery, 3D laser cutting machine, transfer machines, battery manufacturing equipment, wire saws, thermos modules, thermoelectric generation module, and temperature control products; quarry equipment; agricultural and livestock equipment; EH sensor device; iron and steel casting products; and logistics equipment. Further, the company provides retail financing; construction machinery rental services; remanufactured products; other support services; transportation, warehousing, packing, and other services; and purchases and sells used equipment. Komatsu Ltd. was founded in 1884 and is headquartered in Tokyo, Japan.