Comparing NN (NNBR) and SKF (SKFRY)

NN (NASDAQ: NNBR) and SKF (OTCMKTS:SKFRY) are both industrial products companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, risk, valuation, institutional ownership, analyst recommendations and earnings.

Analyst Ratings

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This is a summary of current recommendations and price targets for NN and SKF, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NN 0 2 2 0 2.50
SKF 1 1 0 0 1.50

NN currently has a consensus target price of $33.67, indicating a potential upside of 47.99%. Given NN’s stronger consensus rating and higher possible upside, analysts plainly believe NN is more favorable than SKF.

Dividends

NN pays an annual dividend of $0.28 per share and has a dividend yield of 1.2%. SKF pays an annual dividend of $0.59 per share and has a dividend yield of 2.9%. NN pays out 18.1% of its earnings in the form of a dividend. SKF pays out 41.8% 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.

Earnings and Valuation

This table compares NN and SKF’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NN $619.79 million 1.01 $163.05 million $1.55 14.68
SKF $9.14 billion 1.01 $641.75 million $1.41 14.42

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

Profitability

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

Net Margins Return on Equity Return on Assets
NN 4.87% 10.98% 2.97%
SKF 7.03% 19.55% 6.80%

Risk & Volatility

NN has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, SKF has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500.

Insider & Institutional Ownership

95.8% of NN shares are held by institutional investors. Comparatively, 0.5% of SKF shares are held by institutional investors. 3.3% of NN shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

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

About NN

NN, Inc. is a diversified industrial company and a global manufacturer of high precision components and assemblies to a range of markets on a global basis. The Company’s operating segments include: the Precision Engineered Products Group and the Autocam Precision Components Group. Precision Engineered Products Group combines materials science capability with engineering and production solutions to design and manufacture a range of high-precision metal and plastic components, assemblies and finished devices for the medical, electrical, automotive and aerospace end markets. Autocam Precision Components Group manufactures highly engineered, difficult-to-manufacture precision metal components and subassemblies for the automotive, heating, ventilating and air conditioning (HVAC), fluid power and diesel engine end markets.

About SKF

AB SKF (publ) offers bearings, seals, mechatronics, condition monitoring, lubrication systems, and services. It operates in two segments, Industrial and Automotive. The company's products include bearings, units, and housings; seals; lubrication solutions; linear motion systems; actuation systems, screws, and linear guides and tables; magnetic bearings/permanent magnetic electric motors; mechatronic solutions; maintenance products; condition monitoring systems; power transmission products and solutions; coupling systems; test and measurement equipment; and vehicle aftermarket products, such as wheel end, powertrain, driveline, and steering and suspension products, as well as tools and lubricants. Its services comprise asset management, customer training, engineering consultancy, logistics, mechanical maintenance, and remanufacturing and maintenance services. The company offers its solutions for various industries, including aerospace, agriculture, automation, cars and light trucks, compressors, construction, electric motors, food and beverage, home appliances, industrial fans and pumps, industrial transmissions, machine tools, marine, material handling, medical and health care, metals, mining, mineral processing, ocean energy, oil and gas, portable power tools, power generation, pulp and paper, racing, railways, skates, trucks, trailers and buses, two and three wheelers, and wind energy. AB SKF (publ) markets its products directly, as well as through a network of distributors in North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company was founded in 1907 and is headquartered in Gothenburg, Sweden.

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