Timken Steel Corporation (NYSE: TMST) and Haynes International (NASDAQ:HAYN) are both small-cap basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk.

Dividends

Haynes International pays an annual dividend of $0.88 per share and has a dividend yield of 2.7%. Timken Steel Corporation does not pay a dividend. Haynes International pays out -314.3% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Timken Steel Corporation and Haynes International’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Timken Steel Corporation $1.08 billion 0.59 -$29.80 million ($1.99) -7.26
Haynes International $401.97 million 1.01 $13.03 million ($0.28) -116.61

Haynes International has higher revenue, but lower earnings than Timken Steel Corporation. Haynes International is trading at a lower price-to-earnings ratio than Timken Steel Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for Timken Steel Corporation and Haynes International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Timken Steel Corporation 0 2 1 0 2.33
Haynes International 0 1 1 0 2.50

Timken Steel Corporation currently has a consensus target price of $19.75, indicating a potential upside of 36.77%. Haynes International has a consensus target price of $36.50, indicating a potential upside of 11.79%. Given Timken Steel Corporation’s higher possible upside, analysts clearly believe Timken Steel Corporation is more favorable than Haynes International.

Profitability

This table compares Timken Steel Corporation and Haynes International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Timken Steel Corporation -8.13% -14.32% -7.91%
Haynes International -0.84% -1.59% -0.76%

Risk & Volatility

Timken Steel Corporation has a beta of 2.27, indicating that its share price is 127% more volatile than the S&P 500. Comparatively, Haynes International has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500.

Insider and Institutional Ownership

75.6% of Timken Steel Corporation shares are held by institutional investors. Comparatively, 98.6% of Haynes International shares are held by institutional investors. 8.1% of Timken Steel Corporation shares are held by company insiders. Comparatively, 4.4% of Haynes International shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Haynes International beats Timken Steel Corporation on 10 of the 14 factors compared between the two stocks.

Timken Steel Corporation Company Profile

TimkenSteel Corporation manufactures alloy steel, as well as carbon and micro-alloy steel. The Company’s portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing and precision steel components. In addition, the Company supplies machining and thermal treatment services, as well as manage raw material recycling programs, which are used as a feeder system for its melt operations. The Company’s products include SBQ Steel and Seamless Mechanical Steel Tubing, and Value-added Precision Products and Services. Its focus is on alloy steel. The Company manufactures carbon, micro-alloy and alloy steel, sold as ingots, bars and tubes. In addition to its customized steels, the Company also manufactures custom-make precision components. Its products and services are used in a range of demanding applications in the market sectors, such as oil and gas, industrial equipment, mining and power generation.

Haynes International Company Profile

Haynes International, Inc. (Haynes) is a producer of nickel- and cobalt-based alloys in flat product forms, such as sheet, coil and plate forms. The Company also produces its products as seamless and welded tubulars, and in slab, bar, billet and wire forms. It focuses on developing, manufacturing, marketing and distributing alloys, which are sold in the aerospace, chemical processing and industrial gas turbine industries. Its products consist of high-temperature resistant alloys (HTA) products and corrosion-resistant alloys (CRA) products. Its HTA products are used in manufacturing components for the hot sections of gas turbine engines. Its CRA products are used in a range of applications, such as chemical processing, power plant emissions control, hazardous waste treatment, sour gas production and pharmaceutical vessels. The Company has a four-high Steckel rolling mill used in hot rolling high-performance alloys. The Company has operations in the United States, Europe and China.

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