Schnitzer Steel Industries (SCHN) & Sims Metal Management (SMSMY) Financial Analysis

Schnitzer Steel Industries (NASDAQ:SCHN) and Sims Metal Management (OTCMKTS:SMSMY) are both small-cap basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, analyst recommendations, valuation, institutional ownership and profitability.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Schnitzer Steel Industries and Sims Metal Management, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Schnitzer Steel Industries 1 1 1 0 2.00
Sims Metal Management 0 0 0 0 N/A

Schnitzer Steel Industries presently has a consensus target price of $32.33, indicating a potential upside of 19.62%. Given Schnitzer Steel Industries’ higher probable upside, equities analysts plainly believe Schnitzer Steel Industries is more favorable than Sims Metal Management.

Valuation and Earnings

This table compares Schnitzer Steel Industries and Sims Metal Management’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Schnitzer Steel Industries $2.36 billion 0.31 $156.45 million $5.39 5.01
Sims Metal Management $3.82 billion 0.50 $153.49 million N/A N/A

Schnitzer Steel Industries has higher earnings, but lower revenue than Sims Metal Management.

Risk and Volatility

Schnitzer Steel Industries has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Sims Metal Management has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.

Insider & Institutional Ownership

89.8% of Schnitzer Steel Industries shares are held by institutional investors. Comparatively, 0.0% of Sims Metal Management shares are held by institutional investors. 3.8% of Schnitzer Steel Industries shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Schnitzer Steel Industries pays an annual dividend of $0.75 per share and has a dividend yield of 2.8%. Sims Metal Management pays an annual dividend of $0.39 per share and has a dividend yield of 4.2%. Schnitzer Steel Industries pays out 13.9% of its earnings in the form of a dividend.

Profitability

This table compares Schnitzer Steel Industries and Sims Metal Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Schnitzer Steel Industries 6.62% 23.08% 13.28%
Sims Metal Management N/A N/A N/A

Summary

Schnitzer Steel Industries beats Sims Metal Management on 8 of the 13 factors compared between the two stocks.

Schnitzer Steel Industries Company Profile

Schnitzer Steel Industries, Inc. recycles ferrous and nonferrous scrap metals; and manufactures finished steel products worldwide. It operates through two segments, Auto and Metals Recycling (AMR); and Cascade Steel and Scrap (CSS). The AMR segment buys, collects, processes, recycles, sells, and brokers scrap metals, as well as processes mixed and large pieces of scrap metal into smaller pieces by crushing, torching, shearing, shredding, and sorting. This segment offers ferrous scrap metal, a feedstock used in the production of finished steel products; and nonferrous products, including aluminum, copper, stainless steel, nickel, brass, titanium, lead, high temperature alloys, and joint products. It sells ferrous and nonferrous recycled metal products to steel mills, foundries, and smelters. This segment also procures salvaged vehicles and sells serviceable used auto parts from these vehicles through its 53 self-service auto parts stores in the United States and Western Canada, as well as sells auto bodies and parts containing ferrous and nonferrous materials, such as engines, transmissions, and alternators to wholesalers. The CSS segment produces various finished steel products using recycled metal and other raw materials. It offers semi-finished goods, which include billets; and finished goods consisting of rebar, coiled rebar, wire rods, merchant bars, and other specialty products. This segment serves steel service centers, construction industry subcontractors, steel fabricators, wire drawers, and farm and wood products suppliers. Schnitzer Steel Industries, Inc. was founded in 1906 and is headquartered in Portland, Oregon.

Sims Metal Management Company Profile

Sims Metal Management Limited engages in buying, processing, and selling ferrous and non-ferrous recycled metals. The company operates through five segments: North America Metals, Investment in SA Recycling, Australia/New Zealand, Metals, Europe Metals, and Global E-Recycling. It is involved in the collection, processing, and trading of iron and steel secondary raw materials; and other metal alloys and residues, principally aluminum, lead, copper, zinc, and nickel bearing materials. The company also engages in the provision of environmentally responsible solutions for the disposal of post-consumer electronic products, including IT assets recycled for commercial customers; and environmentally responsible recycling of negative value materials, such as refrigerators, and other electrical and electronic equipment. In addition, it provides secondary processing and other services comprising the melting, refining, and ingoting of non-ferrous metals and others. The company was formerly known as Sims Group Limited and changed its name to Sims Metal Management Limited in November 2008. Sims Metal Management Limited was founded in 1917 and is headquartered in Rye, New York.

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