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

Risk and Volatility

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

Earnings & Valuation

This table compares NOW and Lawson Products’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NOW $2.34 billion 0.54 -$81.00 million ($1.56) -7.57
Lawson Products $287.14 million 0.70 $6.80 million $0.56 40.54

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.

Profitability

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

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

Institutional and Insider Ownership

96.7% of NOW shares are held by institutional investors. Comparatively, 64.2% of Lawson Products shares are held by institutional investors. 3.3% of NOW shares are held by company insiders. Comparatively, 18.2% of Lawson Products shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for NOW and Lawson Products, as reported by MarketBeat.com.

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

NOW currently has a consensus price target of $19.33, indicating a potential upside of 63.70%. Lawson Products has a consensus price target of $25.00, indicating a potential upside of 10.13%. Given NOW’s higher probable upside, equities research analysts plainly believe NOW is more favorable than Lawson Products.

Summary

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

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.

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.

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