Ferguson (NYSE:FERG) versus Karat Packaging (NASDAQ:KRT) Head to Head Contrast

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

Dividends

Karat Packaging pays an annual dividend of $1.88 per share and has a dividend yield of 3.4%. Ferguson pays an annual dividend of $3.56 per share and has a dividend yield of 1.6%. Karat Packaging pays out 75.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ferguson pays out 41.8% of its earnings in the form of a dividend. Karat Packaging has raised its dividend for 2 consecutive years. Karat Packaging is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Karat Packaging and Ferguson, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Karat Packaging	1	2	3	0	2.33
Ferguson	0	6	10	2	2.78

Karat Packaging presently has a consensus price target of $47.00, indicating a potential downside of 13.87%. Ferguson has a consensus price target of $285.57, indicating a potential upside of 27.87%. Given Ferguson’s stronger consensus rating and higher possible upside, analysts clearly believe Ferguson is more favorable than Karat Packaging.

Valuation & Earnings

This table compares Karat Packaging and Ferguson”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Karat Packaging	$467.74 million	2.33	$31.48 million	$2.50	21.83
Ferguson	$31.32 billion	1.38	$1.86 billion	$8.51	26.24

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

Institutional and Insider Ownership

25.2% of Karat Packaging shares are owned by institutional investors. Comparatively, 82.0% of Ferguson shares are owned by institutional investors. 57.9% of Karat Packaging shares are owned by company insiders. Comparatively, 0.2% of Ferguson shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Karat Packaging	10.18%	30.62%	16.67%
Ferguson	6.82%	37.24%	12.31%

Volatility & Risk

Karat Packaging has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500. Comparatively, Ferguson has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Summary

Ferguson beats Karat Packaging on 12 of the 18 factors compared between the two stocks.

About Karat Packaging

Karat Packaging Inc., together with its subsidiaries, engages in the manufacture and distribution of single-use disposable products in plastic, paper, biopolymer-based, and other compostable forms used in various restaurant and foodservice settings. It provides food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves, and other products under the Karat Earth brand. The company also provides new product development, design, printing, and logistics services. It offers its products to national and regional distributors, restaurant chains, retail establishments, and online customers. The company was founded in 2000 and is based in Chino, California.

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.