Critical Comparison: Titan International (TWI) vs. Steel Dynamics (STLD)

Titan International (NYSE:TWI) and Steel Dynamics (NASDAQ:STLD) are both industrial products companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, earnings, analyst recommendations, valuation and risk.

Dividends

Titan International pays an annual dividend of $0.02 per share and has a dividend yield of 0.3%. Steel Dynamics pays an annual dividend of $0.75 per share and has a dividend yield of 1.8%. Titan International pays out -4.1% of its earnings in the form of a dividend. Steel Dynamics pays out 28.3% 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. Steel Dynamics has raised its dividend for 5 consecutive years. Steel Dynamics is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

86.6% of Titan International shares are held by institutional investors. Comparatively, 83.1% of Steel Dynamics shares are held by institutional investors. 17.3% of Titan International shares are held by insiders. Comparatively, 4.4% of Steel Dynamics shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Titan International and Steel Dynamics’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Titan International $1.47 billion 0.31 -$60.04 million ($0.49) -15.35
Steel Dynamics $9.54 billion 1.03 $812.74 million $2.65 15.78

Steel Dynamics has higher revenue and earnings than Titan International. Titan International is trading at a lower price-to-earnings ratio than Steel Dynamics, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Titan International and Steel Dynamics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Titan International -1.06% 4.56% 1.07%
Steel Dynamics 11.49% 31.96% 15.33%

Risk and Volatility

Titan International has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500. Comparatively, Steel Dynamics has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Titan International and Steel Dynamics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Titan International 0 2 0 0 2.00
Steel Dynamics 0 2 11 0 2.85

Titan International presently has a consensus price target of $14.75, suggesting a potential upside of 96.14%. Steel Dynamics has a consensus price target of $53.50, suggesting a potential upside of 27.72%. Given Titan International’s higher probable upside, equities analysts clearly believe Titan International is more favorable than Steel Dynamics.

Summary

Steel Dynamics beats Titan International on 12 of the 17 factors compared between the two stocks.

Titan International Company Profile

Titan International, Inc., together with its subsidiaries, manufactures and sells wheels, tires, wheel and tire assemblies, and undercarriage systems and components for off-highway vehicles in the United States and internationally. It operates in three segments: Agricultural, Earthmoving/Construction, and Consumer. The company offers rims, wheels, tires, and undercarriage systems and components for various agricultural equipment, including tractors, combines, skidders, plows, planters, and irrigation equipment; and off-the-road earthmoving, mining, military, construction, and forestry equipment comprising skid steers, aerial lifts, cranes, graders and levelers, scrapers, self-propelled shovel loaders, articulated dump trucks, load transporters, haul trucks, backhoe loaders, crawler tractors, lattice cranes, shovels, and hydraulic excavators. It also provides bias and light truck tires; and products for all-terrain vehicles, turf, and golf cart applications, as well as high-speed brakes. The company sells its products directly to original equipment manufacturers, as well as to the aftermarket through independent distributors, equipment dealers, and own distribution centers. Titan International, Inc. was founded in 1890 and is based in Quincy, Illinois.

Steel Dynamics Company Profile

Steel Dynamics, Inc., together with its subsidiaries, engages in the steel products manufacturing and metals recycling businesses in the United States and internationally. The company operates through three segments: Steel Operations, Metals Recycling Operations, and Steel Fabrication Operations. The Steel Operations segment provides hot roll, cold roll, and coated steel products; structural steel beams, pilings, and standard and premium grade rail products; engineered special-bar-quality products; merchant bar products, including angles, merchant rounds, flats, channels, and reinforcing bars; beams, channels, and specialty steel sections; and threaded rod products, and cold drawn and heat treated bars. Its products are used in construction, automotive, manufacturing, transportation, heavy and agriculture equipment, and pipe and tube industry sectors. This segment sells its products directly to end-users, steel fabricators, and service centers. The Metals Recycling Operations segment is involved in the purchase, process, and resale of ferrous and nonferrous scrap metals into reusable forms and grades. Its ferrous products include heavy melting steel, busheling, bundled scrap, shredded scrap, steel turnings, and cast iron products; and nonferrous products comprise aluminum, brass, copper, stainless steel, and other nonferrous metals. This segment also provides transportation logistics, scrap management, marketing, and brokerage services. The Steel Fabrication Operations segment produces steel building components comprising steel joists, girders, trusses, and steel deck products for non-residential steel fabricators. Steel Dynamics, Inc. was founded in 1993 and is headquartered in Fort Wayne, Indiana.

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