Critical Analysis: Electrolux (ELUXY) versus Smith (A.O.) (AOS)

Electrolux (OTCMKTS: ELUXY) and Smith (A.O.) (NYSE:AOS) are both large-cap consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.

Earnings & Valuation

This table compares Electrolux and Smith (A.O.)’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Electrolux $14.31 billion 12.13 $673.40 million $4.66 12.89
Smith (A.O.) $3.00 billion 3.65 $296.50 million $2.17 29.40

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

Risk & Volatility

Electrolux has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500. Comparatively, Smith (A.O.) has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Electrolux and Smith (A.O.), as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Electrolux 0 1 0 0 2.00
Smith (A.O.) 0 2 7 0 2.78

Smith (A.O.) has a consensus price target of $67.33, indicating a potential upside of 5.55%. Given Smith (A.O.)’s stronger consensus rating and higher probable upside, analysts clearly believe Smith (A.O.) is more favorable than Electrolux.

Insider & Institutional Ownership

0.0% of Electrolux shares are held by institutional investors. Comparatively, 74.9% of Smith (A.O.) shares are held by institutional investors. 5.0% of Electrolux shares are held by insiders. Comparatively, 1.3% of Smith (A.O.) shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Electrolux pays an annual dividend of $1.72 per share and has a dividend yield of 2.9%. Smith (A.O.) pays an annual dividend of $0.72 per share and has a dividend yield of 1.1%. Electrolux pays out 36.9% of its earnings in the form of a dividend. Smith (A.O.) pays out 33.2% 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. Smith (A.O.) has raised its dividend for 12 consecutive years.

Profitability

This table compares Electrolux and Smith (A.O.)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Electrolux 4.73% 33.29% 6.71%
Smith (A.O.) 9.89% 23.30% 12.38%

Summary

Smith (A.O.) beats Electrolux on 10 of the 17 factors compared between the two stocks.

About Electrolux

AB Electrolux (publ), together with its subsidiaries, manufactures and sells household appliances and appliances for professional use. It operates through six segments: Major Appliances Europe, Middle East and Africa; Major Appliances North America; Major Appliances Latin America; Major Appliances Asia/Pacific; Home Care & Small Domestics Appliances; and Professional Products. The company offers various appliances, such as refrigerators, freezers, cookers, dryers, washing machines, dishwashers, room air-conditioners, microwave ovens, floor-care products, vacuum cleaners, and other small domestic appliances for consumers. It also provides professional products, including food-service equipment for hotels, restaurants, and institutions, as well as laundry equipment for apartment-house laundry rooms, launderettes, hotels, and other professional users. In addition, the company offers hobs, ovens, and hoods for households and professional kitchens; tumble dryers; and water heaters and heat pumps, as well as consumables, accessories, and services. It provides its products under the Electrolux, AEG, Zanussi, Frigidaire, Anova, and Westinghouse brands. The company sells its products to retailers, buying groups, independent stores, and professional users. AB Electrolux (publ) was founded in 1901 and is headquartered in Stockholm, Sweden.

About Smith (A.O.)

A. O. Smith Corporation manufactures and markets residential and commercial gas and electric water heaters, boilers, and water treatment products in North America, China, Europe, and India. The company offers water heaters for residences, restaurants, hotels and motels, office buildings, laundries, car washes, and small businesses; residential and commercial boilers for use in space heating applications for hospitals, schools, hotels, and other large commercial buildings; and water treatment products, including on-the-go filtration bottles, point-of-use carbon and reverse osmosis products, point-of-entry water softeners, and whole-home water filtrations products for residences, restaurants, hotels, and offices. It also provides food and beverage filtration products; expansion tanks, commercial solar water heating systems, swimming pool and spa heaters, and related products and parts; and heat pump and combi boilers, solar units, and air purification products. The company distributes its products through independent wholesale plumbing distributors, as well as through retail channels consisting of hardware and home center chains, and manufacturer representative firms. A. O. Smith Corporation is headquartered in Milwaukee, Wisconsin.

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