Critical Comparison: Quanex Building Products (NYSE:NX) vs. Latham Group (NASDAQ:SWIM)

Quanex Building Products (NYSE:NX) and Latham Group (NASDAQ:SWIM) are both small-cap construction companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, institutional ownership and profitability.

Valuation and Earnings

This table compares Quanex Building Products and Latham Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Quanex Building Products	$1.84 billion	0.38	-$250.81 million	($5.49)	-2.79
Latham Group	$508.52 million	1.45	-$17.86 million	($0.10)	-63.40

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

Insider and Institutional Ownership

97.5% of Quanex Building Products shares are held by institutional investors. Comparatively, 84.0% of Latham Group shares are held by institutional investors. 2.2% of Quanex Building Products shares are held by insiders. Comparatively, 8.6% of Latham Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Quanex Building Products and Latham Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Quanex Building Products	-13.65%	12.46%	5.03%
Latham Group	-2.07%	-2.80%	-1.34%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Quanex Building Products and Latham Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Quanex Building Products	1	1	1	0	2.00
Latham Group	2	1	0	0	1.33

Quanex Building Products presently has a consensus price target of $28.00, suggesting a potential upside of 82.71%. Latham Group has a consensus price target of $7.44, suggesting a potential upside of 17.31%. Given Quanex Building Products’ stronger consensus rating and higher probable upside, analysts clearly believe Quanex Building Products is more favorable than Latham Group.

Volatility and Risk

Quanex Building Products has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500. Comparatively, Latham Group has a beta of 1.71, indicating that its share price is 71% more volatile than the S&P 500.

Summary

Quanex Building Products beats Latham Group on 8 of the 14 factors compared between the two stocks.

About Quanex Building Products

Quanex Building Products Corporation, together with its subsidiaries, provides components for the fenestration industry in the United States, rest of Europe, Canada, Asia, the United Kingdom, and internationally. The company operates through three segments: North American Fenestration, European Fenestration, and North American Cabinet Components. It offers flexible insulating glass spacers, extruded vinyl profiles, window and door screens, and precision-formed metal and wood products, as well as cabinet doors and other components for original equipment manufacturers (OEMs) in the kitchen and bathroom cabinet industry. In addition, the company provides various non-fenestration components and products, including solar panel sealants, trim moldings, vinyl decking, fencing, water retention barriers, and conservatory roof components. It sells its products to OEMs in the building products industry through sales representatives, direct sales force, distributors, and independent sales agents. Quanex Building Products Corporation was founded in 1927 and is based in Houston, Texas.

About Latham Group

Latham Group, Inc. designs, manufactures, and markets in-ground residential swimming pools in North America, Australia, and New Zealand. It offers a portfolio of pools and related products, including in-ground swimming pools that include fiber glass and packaged pools; and pool covers and liners under the Latham, Narellan, CoverStar, Radiant, and GLI brand names. The company was formerly known as Latham Topco, Inc. and changed its name to Latham Group, Inc. in March 2021. Latham Group, Inc. was founded in 1956 and is headquartered in Latham, New York.