W.W. Grainger (NYSE: GWW) and SPX FLOW (NYSE:FLOW) are both industrial products companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Dividends

W.W. Grainger pays an annual dividend of $5.12 per share and has a dividend yield of 2.8%. SPX FLOW does not pay a dividend. W.W. Grainger pays out 59.1% of its earnings in the form of a dividend. SPX FLOW has raised its dividend for 45 consecutive years.

Insider and Institutional Ownership

80.6% of W.W. Grainger shares are owned by institutional investors. Comparatively, 85.2% of SPX FLOW shares are owned by institutional investors. 9.6% of W.W. Grainger shares are owned by company insiders. Comparatively, 3.0% of SPX FLOW shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares W.W. Grainger and SPX FLOW’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
W.W. Grainger 5.08% 34.03% 11.48%
SPX FLOW 0.26% 5.87% 1.76%

Analyst Recommendations

This is a breakdown of recent recommendations for W.W. Grainger and SPX FLOW, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
W.W. Grainger 4 9 0 0 1.69
SPX FLOW 1 1 2 0 2.25

W.W. Grainger presently has a consensus price target of $179.91, suggesting a potential downside of 0.55%. SPX FLOW has a consensus price target of $38.00, suggesting a potential downside of 4.88%. Given W.W. Grainger’s higher possible upside, research analysts plainly believe W.W. Grainger is more favorable than SPX FLOW.

Volatility and Risk

W.W. Grainger has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500. Comparatively, SPX FLOW has a beta of 2.75, suggesting that its stock price is 175% more volatile than the S&P 500.

Valuation and Earnings

This table compares W.W. Grainger and SPX FLOW’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
W.W. Grainger $10.22 billion 1.02 $1.40 billion $8.66 20.89
SPX FLOW $1.89 billion 0.90 $190.40 million $0.11 363.21

W.W. Grainger has higher revenue and earnings than SPX FLOW. W.W. Grainger is trading at a lower price-to-earnings ratio than SPX FLOW, indicating that it is currently the more affordable of the two stocks.

Summary

W.W. Grainger beats SPX FLOW on 10 of the 17 factors compared between the two stocks.

W.W. Grainger Company Profile

W.W. Grainger, Inc. (Grainger) is a distributor of maintenance, repair and operating (MRO) supplies and other related products and services. The Company offers its products and services to businesses and institutions in the United States and Canada, with presence also in Europe, Asia and Latin America. The Company operates through two segments, which include the United States and Canada. The Company’s business support functions provide coordination and guidance in the areas of accounting and finance, business development, communications and investor relations, compensation and benefits, information systems, health and safety, global supply chain functions, human resources, risk management, internal audit, legal, real estate, security, tax and treasury. The Company’s other businesses also include Zoro Tools, Inc. (Zoro), the single channel online business in the United States, MonotaRO Co. (MonotaRO) in Japan, and operations in Europe, Asia and Latin America.

SPX FLOW Company Profile

SPX FLOW, Inc. is a global supplier of engineered solutions. As of December 31, 2016, the Company had operations in over 30 countries and sales in over 150 countries around the world. The Company operates in three business segments: Food and Beverage, Power and Energy, and Industrial. Its product portfolio of pumps, valves, mixers, filters, air dryers, hydraulic tools, homogenizers, separators and heat exchangers, along with the related aftermarket parts and services, supports global industries, including food and beverage, oil and gas, power generation, chemical processing, compressed air and mining. The Food and Beverage segment’s products include mixing, drying, evaporation and separation systems and components, heat exchangers, and reciprocating and centrifugal pump technologies. Its products in the Power and Energy segment include pumps, valves and the related accessories. Its products in the Industrial segment are filtration equipment, hydraulic technologies and heat exchangers.

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