Analyzing Alamo Group (NYSE:ALG) & Mayville Engineering (NYSE:MEC)

Mayville Engineering (NYSE:MEC) and Alamo Group (NYSE:ALG) are both small-cap industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.

Insider & Institutional Ownership

45.4% of Mayville Engineering shares are owned by institutional investors. Comparatively, 92.4% of Alamo Group shares are owned by institutional investors. 5.6% of Mayville Engineering shares are owned by company insiders. Comparatively, 1.1% of Alamo Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

Mayville Engineering has a beta of 1.51, indicating that its stock price is 51% more volatile than the S&P 500. Comparatively, Alamo Group has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Mayville Engineering and Alamo Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mayville Engineering	1	1	3	0	2.40
Alamo Group	1	2	1	1	2.40

Mayville Engineering currently has a consensus target price of $28.67, indicating a potential upside of 104.89%. Alamo Group has a consensus target price of $161.00, indicating a potential upside of 13.52%. Given Mayville Engineering’s higher possible upside, equities analysts plainly believe Mayville Engineering is more favorable than Alamo Group.

Earnings and Valuation

This table compares Mayville Engineering and Alamo Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mayville Engineering	$546.49 million	0.65	-$8.11 million	($0.69)	-20.28
Alamo Group	$1.60 billion	1.08	$103.80 million	$6.41	22.12

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Mayville Engineering	-2.32%	-5.05%	-2.43%
Alamo Group	4.72%	9.43%	6.56%

Summary

Alamo Group beats Mayville Engineering on 9 of the 13 factors compared between the two stocks.

About Mayville Engineering

Mayville Engineering Company (MEC) is a contract manufacturer headquartered in Mayville, Wisconsin. Founded in 1945, the company provides engineering, metal fabrication, finishing and assembly services for original equipment manufacturers. MEC’s capabilities include laser cutting, stamping, forming, welding, machining, coating and the production of finished components and assemblies. Its products are used in applications such as vehicle frames, chassis, cab structures and other equipment components.

About Alamo Group

Alamo Group Inc. is a manufacturer of equipment used to maintain infrastructure and manage vegetation. Its products serve municipal, utility, contractor and agricultural customers, including equipment for roadside mowing, street and vegetation maintenance, snow removal and land management. The company also makes agricultural machinery such as rotary cutters, mowers, tillage and hay tools. Its product portfolio includes equipment sold under brands such as Bush Hog, Gradall, Ventrac and McConnel. Founded in 1969 and headquartered in Seguin, Texas, Alamo Group serves customers in North America and international markets through its manufacturing operations and dealer network.