NACCO Industries (NYSE: NC) and The Middleby Corporation (NASDAQ:MIDD) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Institutional and Insider Ownership

49.2% of NACCO Industries shares are held by institutional investors. Comparatively, 95.3% of The Middleby Corporation shares are held by institutional investors. 30.6% of NACCO Industries shares are held by company insiders. Comparatively, 2.0% of The Middleby Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares NACCO Industries and The Middleby Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NACCO Industries $854.67 million 0.44 $27.70 million $5.18 13.80
The Middleby Corporation $2.28 billion 3.03 $535.17 million $5.33 22.49

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

Dividends

NACCO Industries pays an annual dividend of $1.09 per share and has a dividend yield of 1.5%. The Middleby Corporation does not pay a dividend. NACCO Industries pays out 21.0% of its earnings in the form of a dividend. The Middleby Corporation has increased its dividend for 3 consecutive years.

Analyst Recommendations

This is a summary of current ratings and target prices for NACCO Industries and The Middleby Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NACCO Industries 0 0 0 0 N/A
The Middleby Corporation 0 3 4 0 2.57

The Middleby Corporation has a consensus target price of $142.83, suggesting a potential upside of 19.15%. Given The Middleby Corporation’s higher probable upside, analysts clearly believe The Middleby Corporation is more favorable than NACCO Industries.

Profitability

This table compares NACCO Industries and The Middleby Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NACCO Industries 4.15% 25.69% 8.70%
The Middleby Corporation 13.38% 23.05% 10.38%

Volatility and Risk

NACCO Industries has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500. Comparatively, The Middleby Corporation has a beta of 1.81, meaning that its stock price is 81% more volatile than the S&P 500.

Summary

The Middleby Corporation beats NACCO Industries on 13 of the 16 factors compared between the two stocks.

About NACCO Industries

NACCO Industries, Inc. is a holding company. The Company’s principal businesses include mining, small appliances and specialty retail. The Company operates through three segments: NACoal, HBB and KC. The Company’s subsidiaries include The North American Coal Corporation (NACoal), Hamilton Beach Brands, Inc. (HBB) and Kitchen Collection, LLC (KC). The Company’s NACoal segment mines coal for use in power generation and provides mining services for other natural resources companies. Coal is surface mined from NACoal’s mines in North Dakota, Texas, Mississippi, Louisiana and the Navajo Nation in New Mexico. The Company’s HBB segment designs, markets and distributes a range of small electric household and specialty housewares appliances, including, blenders, can openers, coffeemakers, food processors, indoor electric grills, irons, mixers, slow cookers, toasters and toaster ovens. In addition, HBB designs, markets and distributes commercial products for restaurants, bars and hotels.

About The Middleby Corporation

The Middleby Corporation is engaged in the design, manufacture and sale of commercial foodservice, food processing equipment and residential kitchen equipment. The Company operates in three segments: the Commercial Foodservice Equipment Group, the Food Processing Equipment Group and the Residential Kitchen Equipment Group. It is also engaged in the design, manufacture, marketing, distribution and service of a range of foodservice equipment used in commercial restaurants and institutional kitchens; food preparation, cooking, baking, chilling and packaging equipment for food processing operations, and kitchen equipment, including ranges, ovens, refrigerators, ventilation and dishwashers used in the residential market. It manufactured and assembled the equipment at 28 facilities in the United States, and 23 international manufacturing facilities as of December 31, 2016. Its brands include Anets, Beech, Blodgett, Blodgett Combi, Stewart Systems, Mercury, Rangemaster, Rayburn and Redfyre.

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