Reviewing Mayville Engineering (NYSE:MEC) & Kennametal (NYSE:KMT)

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

Analyst Recommendations

This is a breakdown of recent recommendations for Kennametal and Mayville Engineering, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kennametal	4	5	0	0	1.56
Mayville Engineering	1	1	4	0	2.50

Kennametal currently has a consensus target price of $34.07, suggesting a potential upside of 16.71%. Mayville Engineering has a consensus target price of $35.75, suggesting a potential upside of 89.40%. Given Mayville Engineering’s stronger consensus rating and higher possible upside, analysts clearly believe Mayville Engineering is more favorable than Kennametal.

Insider and Institutional Ownership

45.4% of Mayville Engineering shares are held by institutional investors. 1.4% of Kennametal shares are held by insiders. Comparatively, 5.6% of Mayville Engineering shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Kennametal and Mayville Engineering”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kennametal	$2.36 billion	0.94	$342.39 million	$4.40	6.63
Mayville Engineering	$546.49 million	0.88	-$8.11 million	($0.84)	-22.47

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

Volatility & Risk

Kennametal has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, Mayville Engineering has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500.

Profitability

This table compares Kennametal and Mayville Engineering’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kennametal	14.53%	24.83%	12.84%
Mayville Engineering	-2.95%	-6.63%	-2.99%

Summary

Kennametal beats Mayville Engineering on 9 of the 14 factors compared between the two stocks.

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.

About Mayville Engineering

Mayville Engineering Company, Inc., together with its subsidiaries, engages in the production, design, prototyping and tooling, fabrication, aluminum extrusion, coating, and assembling of aftermarket components in the United States. It also supplies engineered components to original equipment manufacturers. The company serves heavy and medium duty commercial vehicles, construction and access equipment, powersports, agriculture, military, and other end markets. Mayville Engineering Company, Inc. was founded in 1945 and is headquartered in Milwaukee, Wisconsin.