Head to Head Contrast: AB SKF (OTCMKTS:SKFRY) and Kennametal (NYSE:KMT)

AB SKF (OTCMKTS:SKFRY) and Kennametal (NYSE:KMT) are both industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, analyst recommendations and dividends.

Valuation & Earnings

This table compares AB SKF and Kennametal”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AB SKF	$9.36 billion	1.41	$401.34 million	$1.06	27.25
Kennametal	$2.36 billion	0.97	$342.39 million	$4.40	6.81

AB SKF has higher revenue and earnings than Kennametal. Kennametal is trading at a lower price-to-earnings ratio than AB SKF, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares AB SKF and Kennametal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AB SKF	5.05%	13.27%	6.91%
Kennametal	14.53%	24.83%	12.84%

Analyst Recommendations

This is a summary of current ratings for AB SKF and Kennametal, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AB SKF	1	4	1	0	2.00
Kennametal	4	5	0	0	1.56

Kennametal has a consensus target price of $34.07, suggesting a potential upside of 13.65%. Given Kennametal’s higher probable upside, analysts clearly believe Kennametal is more favorable than AB SKF.

Volatility and Risk

AB SKF has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500. Comparatively, Kennametal has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500.

Institutional & Insider Ownership

0.1% of AB SKF shares are held by institutional investors. 1.4% of Kennametal shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

AB SKF pays an annual dividend of $0.59 per share and has a dividend yield of 2.0%. Kennametal pays an annual dividend of $0.80 per share and has a dividend yield of 2.7%. AB SKF pays out 55.7% of its earnings in the form of a dividend. Kennametal pays out 18.2% 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. Kennametal is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Kennametal beats AB SKF on 9 of the 16 factors compared between the two stocks.

About AB SKF

AB SKF (publ) designs, manufactures, and sells bearings and units, seals, lubrication systems, condition monitoring, and services worldwide. It operates in two segments, Industrial and Automotive. The company offers rolling, mounted and housings, super-precision, slewing, plain, magnetic, and thin section bearings; industrial and automotive seals; lubricants, manual lubrication tools, lubricators, automatic lubrication systems, and lubrication system components; maintenance products, such as hydraulic, mechanical, and alignment tools, as well as heaters; belts, pulleys, chains, sprockets, bushings and hubs, couplings, and bolts and tightening systems; condition monitoring systems; test and measuring equipment, such as waviness and roundness analyzers, noise and vibration testers, and grease test rigs, as well as calibration with traceability, machine training and support, and upgrades and refurbishment services; and vehicle aftermarket products. It also provides application engineering services consisting of technical consultancy, numerical simulation and design, and root cause analysis; asset management services, such as assessment and benchmarking, maintenance strategy review, spare parts and inventory management, and lubrication management; condition-based maintenance, including vibration analysis and diagnostics, thermography, lubrication analysis, and condition monitoring system installation; mechanical maintenance comprising mounting and dismounting, precision alignment, and balancing; remanufacturing and customization; and training solutions, which include instructor-led training, e-learning courses, and webinar recordings. The company serves the aerospace, agriculture, automotive, construction, food and beverage, general machinery, machine tools, marine, material handling, metals, mining, mineral processing, ocean energy, pulp and paper, railways, and wind industries. AB SKF (publ) was incorporated in 1907 and is headquartered in Gothenburg, Sweden.

About Kennametal

Kennametal Inc. engages in development and application of tungsten carbides, ceramics, and super-hard materials and solutions for use in metal cutting and extreme wear applications to enable customers work against corrosion and high temperatures conditions worldwide. The company operates through two segments, Metal Cutting and Infrastructure. It offers standard and custom products, including turning, milling, hole making, tooling systems, and services, as well as specialized wear components and metallurgical powders for manufacturers engaged in various industries, such as the manufacturers of transportation vehicles and components, machine tools, and light and heavy machinery; airframe and aerospace components; and energy-related components for the oil and gas industry, as well as power generation. In addition, the company provides specified product design, selection, application, and support services; and standard and custom metal cutting solutions to aerospace, general engineering, energy, and transportation customers. Further, it produces compacts, nozzles, frac seats, and custom components used in oil and gas, and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling, and road milling; tungsten carbide powders for the oil and gas, aerospace, and process industries; and ceramics used by the packaging industry for metallization of films and papers. The company provides its products under the Kennametal, WIDIA, WIDIA Hanita, and WIDIA GTD brands through its direct sales force; a network of independent and national distributors; integrated supplier channels; and through the Internet. The company was founded in 1938 and is based in Pittsburgh, Pennsylvania.