Critical Comparison: ThyssenKrupp (OTCMKTS:TKAMY) vs. Cleveland-Cliffs (NYSE:CLF)

ThyssenKrupp (OTCMKTS:TKAMY) and Cleveland-Cliffs (NYSE:CLF) are both mid-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Valuation & Earnings

This table compares ThyssenKrupp and Cleveland-Cliffs”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ThyssenKrupp	$38.01 billion	0.24	-$1.63 billion	($1.42)	-10.36
Cleveland-Cliffs	$18.62 billion	0.28	-$754.00 million	($3.40)	-3.11

Cleveland-Cliffs has lower revenue, but higher earnings than ThyssenKrupp. ThyssenKrupp is trading at a lower price-to-earnings ratio than Cleveland-Cliffs, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

67.7% of Cleveland-Cliffs shares are held by institutional investors. 1.7% of Cleveland-Cliffs shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for ThyssenKrupp and Cleveland-Cliffs, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ThyssenKrupp	1	1	0	1	2.33
Cleveland-Cliffs	3	4	3	0	2.00

Cleveland-Cliffs has a consensus target price of $12.88, indicating a potential upside of 21.86%. Given Cleveland-Cliffs’ higher possible upside, analysts plainly believe Cleveland-Cliffs is more favorable than ThyssenKrupp.

Dividends

ThyssenKrupp pays an annual dividend of $0.09 per share and has a dividend yield of 0.6%. Cleveland-Cliffs pays an annual dividend of $0.24 per share and has a dividend yield of 2.3%. ThyssenKrupp pays out -6.3% of its earnings in the form of a dividend. Cleveland-Cliffs pays out -7.1% 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. Cleveland-Cliffs is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

ThyssenKrupp has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500. Comparatively, Cleveland-Cliffs has a beta of 1.96, indicating that its stock price is 96% more volatile than the S&P 500.

Profitability

This table compares ThyssenKrupp and Cleveland-Cliffs’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ThyssenKrupp	-2.40%	-7.90%	-2.80%
Cleveland-Cliffs	-9.00%	-20.02%	-6.10%

Summary

Cleveland-Cliffs beats ThyssenKrupp on 10 of the 17 factors compared between the two stocks.

About ThyssenKrupp

thyssenkrupp AG operates as an industrial and technology company in Germany and internationally. It operates through five segments: Automotive Technology, Decarbon Technologies, Materials Services, Steel Europe, and Marine Systems. The Automotive Technology segment offers components, systems, and automation solutions for vehicle manufacturing, such as axle assembly, body in white, camshafts and electric engine components, dampers, dies, springs and stabilizers, crankshafts and conrods, steering, and undercarriages. The Decarbon Technologies segment provides slewing bearings and rings, green ammonia and methanol, chemical and cement plants, high pressure processing, and refinery services, as well as green hydrogen. The Marine System segment manufactures submarines, naval services, and naval surface vessels. The Material Services segment offers 3D-printing/additive manufacturing, alloys, infrastructure project and services, industrial minerals, logistics services, metals, nonferrous metals, plastics, rolled steel, special ores, and stainless steel. The Steel Europe segment manufactures composite materials, electrical steel, hot strips, organic coated strips and sheet, packaging steel, precision steel strip, and sheet and coated products. thyssenkrupp AG was founded in 1811 and is headquartered in Essen, Germany.

About Cleveland-Cliffs

Cleveland-Cliffs is the largest flat-rolled steel company and the largest iron ore pellet producer in North America. The company is vertically integrated from mining through iron making, steelmaking, rolling, finishing and downstream with hot and cold stamping of steel parts and components. The company was formerly known as Cliffs Natural Resources Inc. and changed its name to Cleveland-Cliffs Inc. in August 2017. Cleveland-Cliffs Inc. was founded in 1847 and is headquartered in Cleveland, Ohio.