Critical Contrast: Northwest Pipe (NASDAQ:NWPX) & POSCO (PKX)

Northwest Pipe (NASDAQ: NWPX) and POSCO (NYSE:PKX) are both industrial products companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, analyst recommendations, institutional ownership and risk.

Valuation & Earnings

This table compares Northwest Pipe and POSCO’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Northwest Pipe $156.26 million 1.08 -$9.26 million ($0.23) -76.08
POSCO $45.65 billion 0.55 $1.22 billion $5.58 14.06

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

Profitability

This table compares Northwest Pipe and POSCO’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Northwest Pipe -1.59% -3.03% -2.67%
POSCO 4.01% 5.11% 2.99%

Risk and Volatility

Northwest Pipe has a beta of 1.24, indicating that its stock price is 24% more volatile than the S&P 500. Comparatively, POSCO has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Northwest Pipe and POSCO, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northwest Pipe 0 1 0 0 2.00
POSCO 0 2 3 0 2.60

Northwest Pipe currently has a consensus target price of $9.00, indicating a potential downside of 48.57%. Given Northwest Pipe’s higher possible upside, analysts clearly believe Northwest Pipe is more favorable than POSCO.

Insider and Institutional Ownership

86.3% of Northwest Pipe shares are owned by institutional investors. Comparatively, 5.4% of POSCO shares are owned by institutional investors. 2.0% of Northwest Pipe shares are owned by insiders. Comparatively, 0.0% of POSCO shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

POSCO pays an annual dividend of $0.56 per share and has a dividend yield of 0.7%. Northwest Pipe does not pay a dividend. POSCO pays out 10.0% of its earnings in the form of a dividend.

Summary

POSCO beats Northwest Pipe on 9 of the 15 factors compared between the two stocks.

Northwest Pipe Company Profile

Northwest Pipe Company is a manufacturer of engineered steel pipe water systems. The Company operates through two segments. The Water Transmission segment produces steel pipeline systems for use in drinking water infrastructure, and has approximately eight manufacturing facilities, located in Portland, Oregon; Denver, Colorado; Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas; St. Louis, Missouri; Salt Lake City, Utah, and Monterrey, Mexico. The Tubular Products segment produces steel line pipe products for energy applications, and has a manufacturing facility located in Atchison, Kansas. The Company, through Water Transmission Group, produces engineered welded steel pipe products for use in water transmission applications. It also manufactures smaller diameter electric resistance welded (ERW) steel pipe through its Tubular Products Group. The Company’s solutions-based products are used in water transmission, plant piping, tunnels and river crossings applications.

POSCO Company Profile

POSCO is a Korea-based company principally engaged in the manufacture and distribution of steel products. The Company operates in four segments: steel, trading, construction, and others. The steel segment includes production of steel products and sale of such products. The trading segment consists of global trading activities of POSCO Daewoo Corporation, exporting and importing a range of steel products that are both obtained from and supplied to it, as well as between other suppliers and purchasers in Korea and overseas. The construction segment includes planning, designing and construction of industrial plants, civil engineering projects, and commercial and residential buildings, both in Korea and overseas. The others segment includes power generation, liquefied natural gas (LNG) logistics, and network and system integration.

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