Encore Wire (NASDAQ: WIRE) and Quanex (NYSE:NX) are both small-cap industrial products companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, institutional ownership, earnings, analyst recommendations, dividends and profitability.
Institutional & Insider Ownership
88.9% of Encore Wire shares are held by institutional investors. 3.8% of Encore Wire shares are held by company insiders. Comparatively, 5.3% of Quanex shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
This table compares Encore Wire and Quanex’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility and Risk
Encore Wire has a beta of 2, suggesting that its share price is 100% more volatile than the S&P 500. Comparatively, Quanex has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.
Encore Wire pays an annual dividend of $0.08 per share and has a dividend yield of 0.1%. Quanex pays an annual dividend of $0.16 per share and has a dividend yield of 0.9%. Encore Wire pays out 3.1% of its earnings in the form of a dividend. Quanex pays out 20.8% 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.
This is a summary of current ratings and target prices for Encore Wire and Quanex, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Encore Wire currently has a consensus price target of $56.00, suggesting a potential downside of 0.27%. Quanex has a consensus price target of $25.00, suggesting a potential upside of 43.27%. Given Quanex’s higher possible upside, analysts plainly believe Quanex is more favorable than Encore Wire.
Earnings and Valuation
This table compares Encore Wire and Quanex’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Encore Wire||$1.16 billion||1.01||$67.01 million||$2.61||21.51|
|Quanex||$866.55 million||0.71||$18.68 million||$0.77||22.66|
Encore Wire has higher revenue and earnings than Quanex. Encore Wire is trading at a lower price-to-earnings ratio than Quanex, indicating that it is currently the more affordable of the two stocks.
Encore Wire beats Quanex on 11 of the 15 factors compared between the two stocks.
About Encore Wire
Encore Wire Corporation manufactures and sells electrical building wire and cable products for interior electrical wiring in the United States. Its products include NM-B cable for use as interior wiring in homes, apartments, and manufactured housing; THHN/THWN-2, metal-clad, and armored cables for use primarily as wiring in commercial and industrial buildings; UF-B cables; XHHW-2 cables; RHH/RHW-2 cables; and other types of wire products. The company markets its products primarily through independent manufacturers' representatives to wholesale electrical distributors. Encore Wire Corporation was founded in 1989 and is headquartered in McKinney, Texas.
Quanex Building Products Corporation, together with its subsidiaries, provides components for the fenestration industry worldwide. It operates through three segments: North American Engineered Components, European Engineered Components, and North American Cabinet Components. The company offers flexible insulating glass spacers; extruded vinyl profiles; window and door screens; cabinet doors and other components for original equipment manufacturers (OEMs) in the kitchen and bathroom cabinet industry; and precision-formed metal and wood products, as well as solar panel sealants, trim moldings, vinyl decking and fencing products, water retention barriers, and conservatory roof components. It sells its products to OEMs in the building products industry through sales representatives, direct sales force, distributors, and independent sales agents. The company is headquartered in Houston, Texas.
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