Financial Analysis: HC2 (HCHC) & Valmont Industries (VMI)

HC2 (NYSE: HCHC) and Valmont Industries (NYSE:VMI) are both multi-sector conglomerates companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, risk, valuation, institutional ownership, earnings, analyst recommendations and profitability.

Profitability

This table compares HC2 and Valmont Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HC2 -2.87% -39.02% -1.33%
Valmont Industries 4.23% 14.17% 6.18%

Institutional & Insider Ownership

62.3% of HC2 shares are owned by institutional investors. Comparatively, 87.1% of Valmont Industries shares are owned by institutional investors. 16.0% of HC2 shares are owned by company insiders. Comparatively, 3.0% of Valmont Industries shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for HC2 and Valmont Industries, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HC2 0 0 1 0 3.00
Valmont Industries 0 3 1 0 2.25

HC2 presently has a consensus target price of $11.50, indicating a potential upside of 118.63%. Valmont Industries has a consensus target price of $162.00, indicating a potential upside of 13.56%. Given HC2’s stronger consensus rating and higher probable upside, equities analysts clearly believe HC2 is more favorable than Valmont Industries.

Volatility & Risk

HC2 has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Valmont Industries has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500.

Dividends

Valmont Industries pays an annual dividend of $1.50 per share and has a dividend yield of 1.1%. HC2 does not pay a dividend. Valmont Industries pays out 21.5% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares HC2 and Valmont Industries’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HC2 $1.63 billion 0.14 -$46.91 million ($0.99) -5.31
Valmont Industries $2.75 billion 1.18 $116.24 million $6.97 20.47

Valmont Industries has higher revenue and earnings than HC2. HC2 is trading at a lower price-to-earnings ratio than Valmont Industries, indicating that it is currently the more affordable of the two stocks.

Summary

Valmont Industries beats HC2 on 10 of the 14 factors compared between the two stocks.

About HC2

HC2 Holdings, Inc. engages in construction, marine services, insurance, telecommunications, energy, life sciences, and other businesses in the United States, the United Kingdom, and internationally. The company fabricates and erects structural steel for commercial and industrial construction projects, such as buildings and office complexes, hotels and casinos, convention centers, sports arenas and stadiums, shopping malls, hospitals, dams, bridges, mines, and power plants. It also fabricates trusses and girders; and fabricates and erects water pipes, water storage tanks, pollution control scrubbers, tunnel liners, pressure vessels, strainers, filters, separators, and various customized products. In addition, the company provides subsea cable installation and maintenance services for the telecommunications sector; installation, maintenance, and repair services for fiber optic communication and power infrastructure to offshore platforms; and installation services for power cables for use in offshore wind farms and in the offshore wind market. Further, it distributes natural gas motor fuels; designs, builds, owns, acquires, operates, and maintains compressed natural gas fueling stations for transportation vehicles; and offers voice communication services for national telecommunications, mobile, prepaid, and voice over Internet protocol service operators, as well as wholesale carriers and Internet service providers. Additionally, the company provides long-term care, life, and annuity insurance products to individuals. Furthermore, it focuses on developing products to treat early osteoarthritis of the knee; develops skin lightening technology; owns licenses to create and distribute NASCAR video games; and offers analytics on broadcast TV, digital, and social media online platforms. The company was formerly known as PTGi Holding Inc. and changed its name to HC2 Holdings, Inc. in April 2014. HC2 Holdings, Inc. was founded in 1994 and is headquartered in New York, New York.

About Valmont Industries

Valmont Industries, Inc. produces and sells fabricated metal products in the United States and internationally. It operates through four segments: Engineered Support Structures, Utility Support Structures, Coatings, and Irrigation. The Engineered Support Structures segment manufactures and distributes engineered metal, and composite structures and components for the lighting and traffic, wireless communication, and roadway safety industries. This segment produces steel, aluminum, and composite poles, towers, industrial and architectural access systems, and other structures. The Utility Support Structures segment manufactures engineered steel and concrete structures for the utility industry, including on and offshore wind energy, and gas and oil exploration structures. The Coatings segment provides hot-dipped galvanizing, anodizing, powder coating, and e-coating services. The Irrigation segment manufactures agricultural irrigation equipment, and related parts and services under the Valley brand name for the agricultural industry; and tubular products for industrial customers. In addition, the company offers forged steel grinding media for the mining industry. It serves municipalities and government entities, commercial lighting fixtures manufacturing companies, contractors, telecommunication and utility companies, and large farms, as well as the general manufacturing sector. Valmont Industries, Inc. was founded in 1946 and is headquartered in Omaha, Nebraska.

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