Deere & (NYSE: DE) and Alamo Group (NYSE:ALG) are both industrial products companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, dividends, profitability, analyst recommendations, valuation, earnings and risk.

Earnings & Valuation

This table compares Deere & and Alamo Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Deere & $28.05 billion 1.33 $4.43 billion $5.97 19.45
Alamo Group $850.95 million 1.26 $93.56 million $3.89 23.66

Deere & has higher revenue and earnings than Alamo Group. Deere & is trading at a lower price-to-earnings ratio than Alamo Group, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

67.2% of Deere & shares are held by institutional investors. Comparatively, 90.3% of Alamo Group shares are held by institutional investors. 0.8% of Deere & shares are held by company insiders. Comparatively, 4.0% of Alamo Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Deere & has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, Alamo Group has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500.

Dividends

Deere & pays an annual dividend of $2.40 per share and has a dividend yield of 2.1%. Alamo Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.4%. Deere & pays out 40.2% of its earnings in the form of a dividend. Alamo Group pays out 10.3% 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. Deere & has increased its dividend for 2 consecutive years. Deere & is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations for Deere & and Alamo Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Deere & 2 14 8 0 2.25
Alamo Group 0 1 1 0 2.50

Deere & presently has a consensus target price of $128.63, indicating a potential upside of 10.76%. Alamo Group has a consensus target price of $92.00, indicating a potential downside of 0.02%. Given Deere &’s higher probable upside, research analysts plainly believe Deere & is more favorable than Alamo Group.

Profitability

This table compares Deere & and Alamo Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Deere & 6.81% 25.96% 3.27%
Alamo Group 5.32% 11.78% 7.57%

Summary

Deere & beats Alamo Group on 10 of the 17 factors compared between the two stocks.

About Deere &

Deere & Company is engaged in equipment operations. The Company is engaged in providing financial services. The Company operates through three business segments: agriculture and turf, construction and forestry, and financial services. The agriculture and turf segment manufactures and distributes a line of agriculture and turf equipment and related service parts. The construction and forestry segment provides a line of construction equipment, and forestry machines and attachments available in the world. The construction and forestry segment is also engaged in providing fleet management telematics solutions. The financial services segment primarily finances sales and leases by the Company dealers of new and used agriculture and turf equipment and construction and forestry equipment. The financial services segment also provides wholesale financing to dealers of the foregoing equipment, finances retail revolving charge accounts and offers extended equipment warranties.

About Alamo Group

Alamo Group Inc. is engaged in the design and manufacture of agricultural equipment and infrastructure maintenance equipment for governmental and industrial use. The Company operates in Industrial, Agricultural and European segments. The Company’s products include tractor-mounted mowing and other vegetation maintenance equipment, street sweepers, excavators, vacuum trucks, snow removal equipment, pothole patchers, zero turn radius mowers, agricultural implements and related aftermarket. As of December 31, 2016, the Company operated 24 plants in North America, Europe, Australia and Brazil. The Company sells its products through a network of independent dealers and distributors to Governmental end users, related independent contractors, as well as to the agricultural and commercial turf markets. It also offers replacement parts for each of its wholegoods lines. The Company’s products are sold through various marketing organizations, and dealer and distributor networks.

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