Critical Comparison: G&K Services (GKSR) versus Brady Corporation (BRC)

G&K Services (NASDAQ: GKSR) and Brady Corporation (NYSE:BRC) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

76.6% of Brady Corporation shares are owned by institutional investors. 15.6% of Brady Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares G&K Services and Brady Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
G&K Services N/A N/A N/A N/A N/A
Brady Corporation $1.11 billion 1.68 $156.45 million $1.84 19.81

Brady Corporation has higher revenue and earnings than G&K Services.

Dividends

Brady Corporation pays an annual dividend of $0.82 per share and has a dividend yield of 2.2%. G&K Services does not pay a dividend. Brady Corporation pays out 44.6% of its earnings in the form of a dividend. Brady Corporation has raised its dividend for 31 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for G&K Services and Brady Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
G&K Services 0 0 0 0 N/A
Brady Corporation 1 1 1 0 2.00

Brady Corporation has a consensus target price of $38.33, suggesting a potential upside of 5.17%. Given Brady Corporation’s higher probable upside, analysts clearly believe Brady Corporation is more favorable than G&K Services.

Profitability

This table compares G&K Services and Brady Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
G&K Services 3.79% 9.12% 4.03%
Brady Corporation 8.59% 13.93% 8.84%

Summary

Brady Corporation beats G&K Services on 10 of the 11 factors compared between the two stocks.

About G&K Services

G&K Services, Inc. is a service-focused provider of branded uniform and facility services programs. The Company provides a range of workwear and protective safety apparel through rental and direct purchase programs. The Company also supplies various facility products and services, including floor mats, towels, mops, restroom hygiene products, and first aid supplies. It also manufactures certain work apparel garments that are used to support its garment rental and direct purchase programs. It operates in two segments: United States (includes the Dominican Republic) and Canada. The Company operated from approximately 160 locations, as of July 2, 2016. The Company serves a diverse base of customer locations in various industries, including automotive, warehousing, distribution, transportation, energy, manufacturing, food processing, retail, restaurants, construction and trades, hospitality, government, healthcare and others.

About Brady Corporation

Brady Corporation is a manufacturer and supplier of identification solutions and workplace safety products that identify and protect premises, products and people. The Company has two segments: Identification Solutions (IDS) and Workplace Safety (WPS). The IDS segment includes identification and healthcare products, and the WPS segment includes workplace safety and compliance products. The IDS segment offers products that are manufactured under various brands, including the Brady brand, and are primarily sold through distribution to a range of maintenance, repair and operations (MRO) and original equipment manufacturing (OEM) customers, and through other channels. The WPS segment offers a range of product categories, such as safety and compliance signs, tags, and labels; informational and architectural signage; industrial warehouse and office equipment, and labor law compliance posters. Its brands include Electromark, Identicard, PromoVision, Scafftag, Seton and Emedco.

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