Barnes Group (NYSE: B) and Kaman Corporation (NYSE:KAMN) are both industrial products companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Risk & Volatility

Barnes Group has a beta of 1.43, indicating that its stock price is 43% more volatile than the S&P 500. Comparatively, Kaman Corporation has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500.

Dividends

Barnes Group pays an annual dividend of $0.56 per share and has a dividend yield of 0.9%. Kaman Corporation pays an annual dividend of $0.80 per share and has a dividend yield of 1.6%. Barnes Group pays out 19.6% of its earnings in the form of a dividend. Kaman Corporation pays out 43.2% 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. Barnes Group has raised its dividend for 2 consecutive years and Kaman Corporation has raised its dividend for 4 consecutive years. Kaman Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

85.1% of Barnes Group shares are held by institutional investors. Comparatively, 93.7% of Kaman Corporation shares are held by institutional investors. 8.5% of Barnes Group shares are held by insiders. Comparatively, 2.4% of Kaman Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Barnes Group and Kaman Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Barnes Group 11.69% 13.02% 7.20%
Kaman Corporation 2.95% 9.24% 3.73%

Earnings and Valuation

This table compares Barnes Group and Kaman Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Barnes Group $1.34 billion 2.64 $305.46 million $2.86 23.01
Kaman Corporation $1.77 billion 0.79 $161.23 million $1.85 27.09

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Barnes Group and Kaman Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Barnes Group 0 2 3 0 2.60
Kaman Corporation 0 4 1 0 2.20

Barnes Group currently has a consensus price target of $63.00, suggesting a potential downside of 4.27%. Kaman Corporation has a consensus price target of $56.67, suggesting a potential upside of 13.06%. Given Kaman Corporation’s higher probable upside, analysts clearly believe Kaman Corporation is more favorable than Barnes Group.

Summary

Barnes Group beats Kaman Corporation on 11 of the 17 factors compared between the two stocks.

About Barnes Group

Barnes Group Inc. is an industrial and aerospace manufacturer and service provider, serving a range of end markets and customers. The Company’s engineered products, industrial technologies, and solutions are used in applications that provide transportation, manufacturing, healthcare products and technology to the world. Its segments include Industrial and Aerospace. The Industrial segment is engaged in the manufacturing of precision parts, products and systems for applications serving a customer base in end-markets, such as transportation, industrial equipment, consumer products, packaging, electronics, medical devices and energy. The Industrial segment includes the Molding Solutions, Nitrogen Gas Products and Engineered Components business units. The Aerospace segment includes the original equipment manufacturer (OEM) business and the aftermarket business, which includes maintenance repair and overhaul services and the manufacture and delivery of aerospace aftermarket spare parts.

About Kaman Corporation

Kaman Corporation conducts business in the aerospace and distribution markets. The Company operates through two segments: Distribution and Aerospace. The Company’s brands include KAflex, KAron and K-MAX. Distribution segment is a power transmission, motion control, and fluid power industrial distributor with operations throughout the United States. Distribution segment conducts business in the mechanical power transmission and bearings, electrical, automation and control, and fluid power product platforms and provides total solutions from system design and integration to machine parts and services to the national manufacturing industry. Aerospace segment produces and markets aircraft bearings and components; super precision, miniature ball bearings; metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft, and safe and arming solutions for missile and bomb systems for the United States and allied militaries.

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