Colfax Corporation (NYSE: CFX) and Xylem (NYSE:XYL) are both mid-cap industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Profitability

This table compares Colfax Corporation and Xylem’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Colfax Corporation 4.35% 6.30% 3.10%
Xylem 6.58% 17.26% 6.40%

Risk and Volatility

Colfax Corporation has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500. Comparatively, Xylem has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Colfax Corporation and Xylem, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Colfax Corporation 0 4 8 0 2.67
Xylem 0 4 9 0 2.69

Colfax Corporation presently has a consensus target price of $46.50, indicating a potential upside of 17.93%. Xylem has a consensus target price of $59.18, indicating a potential downside of 3.85%. Given Colfax Corporation’s higher possible upside, analysts plainly believe Colfax Corporation is more favorable than Xylem.

Valuation and Earnings

This table compares Colfax Corporation and Xylem’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Colfax Corporation $3.62 billion 1.34 $446.48 million $1.28 30.80
Xylem $4.23 billion 2.61 $723.00 million $1.55 39.71

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

Institutional & Insider Ownership

75.2% of Colfax Corporation shares are held by institutional investors. Comparatively, 86.5% of Xylem shares are held by institutional investors. 10.6% of Colfax Corporation shares are held by insiders. Comparatively, 0.8% of Xylem shares are held by 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.

Dividends

Xylem pays an annual dividend of $0.72 per share and has a dividend yield of 1.2%. Colfax Corporation does not pay a dividend. Xylem pays out 46.5% of its earnings in the form of a dividend. Colfax Corporation has increased its dividend for 4 consecutive years.

Summary

Xylem beats Colfax Corporation on 12 of the 17 factors compared between the two stocks.

Colfax Corporation Company Profile

Colfax Corporation is an industrial manufacturing and engineering company. The Company provides gas and fluid handling and fabrication technology products and services to customers around the world. The Company’s segments include Gas and Fluid Handling, and Fabrication Technology. The Gas and Fluid Handling segment supplies a range of gas and fluid handling products, including heavy-duty centrifugal and axial fans, rotary heat exchangers, gas compressors, pumps and certain related products, as well as aftermarket and lubrication-related services, which serves customers in the power generation, oil, gas and petrochemical, mining, marine (including defense) and general industrial and other end markets. The Fabrication Technology segment supplies welding equipment and consumables, cutting equipment and consumables, and automated welding and cutting systems. It formulates, develops, manufactures and supplies consumable products and equipment.

Xylem Company Profile

Xylem Inc. is a water technology company. The Company designs, manufactures and services engineered solutions across a range of critical applications. It is an equipment and service provider for water and wastewater applications with a portfolio of products and services addressing the cycle of water, from collection, distribution and use to the return of water to the environment. It has three business segments, which include Water Infrastructure, Applied Water and Sensus. Water Infrastructure focuses on the transportation, treatment and testing of water, offering a range of products, including water and wastewater pumps, and controls and systems. Applied Water serves the uses of water and focuses on the residential, commercial, industrial and agricultural markets. The Sensus segment’s products include metering, networked communications, measurement and control technologies, software and services, including cloud-based analytics, remote monitoring and data management.

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