Lawson Products (NASDAQ: LAWS) and NOW (NYSE:DNOW) are both small-cap industrial products companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, valuation, dividends, institutional ownership and earnings.

Profitability

This table compares Lawson Products and NOW’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lawson Products 1.85% 2.54% 1.22%
NOW -7.14% -7.83% -5.63%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Lawson Products and NOW, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lawson Products 0 0 1 0 3.00
NOW 0 4 5 0 2.56

Lawson Products currently has a consensus target price of $25.00, indicating a potential upside of 7.53%. NOW has a consensus target price of $19.33, indicating a potential upside of 62.88%. Given NOW’s higher possible upside, analysts clearly believe NOW is more favorable than Lawson Products.

Institutional and Insider Ownership

65.3% of Lawson Products shares are held by institutional investors. Comparatively, 99.8% of NOW shares are held by institutional investors. 18.2% of Lawson Products shares are held by company insiders. Comparatively, 3.3% of NOW shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Lawson Products and NOW’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lawson Products $287.14 million 0.72 $6.80 million $0.56 41.52
NOW $2.34 billion 0.55 -$81.00 million ($1.56) -7.61

Lawson Products has higher revenue, but lower earnings than NOW. NOW is trading at a lower price-to-earnings ratio than Lawson Products, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Lawson Products has a beta of 1.47, suggesting that its share price is 47% more volatile than the S&P 500. Comparatively, NOW has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Summary

Lawson Products beats NOW on 9 of the 13 factors compared between the two stocks.

About Lawson Products

Lawson Products, Inc. is a distributor of products and services the industrial, commercial, institutional and government maintenance, repair and operations (MRO) market. The Company’s product categories include fastening systems, fluid power, specialty chemicals, cutting tools and abrasives, electrical, aftermarket automotive supplies, safety, welding and metal repair, and other. The Company supplies a range of automotive products, including body hardware, body shop, brake/wheel, fleet/truck, repair harness assembly and other parts. The Company offers approximately 200,000 different core products for sale of which approximately 50,000 products are maintained in its distribution centers. The Company’s customers operate in a range of industries, including automotive repair, commercial vehicle maintenance, government, manufacturing, food processing, distribution, construction, oil and gas, mining, wholesale and service.

About NOW

NOW Inc. (NOW) is a global distributor to the oil and gas and industrial markets. The Company operates under the DistributionNOW and Wilson Export brands. Its segments include the United States, Canada and International. As of December 31, 2016, its segments, the United States, Canada and International, had over 200, 55 and 35 locations, respectively. The United States segment comprises United States Energy, United States Supply Chain and United States Process Solutions. NOW’s energy product offerings are used in the oil and gas industry, including upstream drilling and completion, exploration and production, midstream infrastructure development and downstream petroleum refining, as well as in other industries, such as chemical processing, power generation and industrial manufacturing operations. It provides supply chain management to drilling contractors, exploration and production (E&P) operators, midstream operators, downstream energy and industrial manufacturing companies.

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