Reviewing Kadant (NYSE:KAI) & ITT (NYSE:ITT)

ITT (NYSE:ITT) and Kadant (NYSE:KAI) are both industrials companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, valuation and profitability.

Profitability

This table compares ITT and Kadant’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ITT	8.90%	15.90%	7.74%
Kadant	9.52%	13.16%	7.67%

Valuation and Earnings

This table compares ITT and Kadant”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ITT	$3.94 billion	4.96	$488.00 million	$5.10	42.82
Kadant	$1.05 billion	3.47	$101.97 million	$9.30	33.27

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

Volatility and Risk

ITT has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500. Comparatively, Kadant has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Dividends

ITT pays an annual dividend of $1.54 per share and has a dividend yield of 0.7%. Kadant pays an annual dividend of $1.44 per share and has a dividend yield of 0.5%. ITT pays out 30.2% of its earnings in the form of a dividend. Kadant pays out 15.5% 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. ITT has raised its dividend for 10 consecutive years and Kadant has raised its dividend for 12 consecutive years.

Analyst Ratings

This is a summary of recent ratings and recommmendations for ITT and Kadant, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ITT	0	1	11	0	2.92
Kadant	0	3	1	0	2.25

ITT currently has a consensus price target of $241.08, indicating a potential upside of 10.39%. Kadant has a consensus price target of $357.50, indicating a potential upside of 15.56%. Given Kadant’s higher possible upside, analysts plainly believe Kadant is more favorable than ITT.

Insider & Institutional Ownership

91.6% of ITT shares are owned by institutional investors. Comparatively, 96.1% of Kadant shares are owned by institutional investors. 0.9% of ITT shares are owned by insiders. Comparatively, 1.3% of Kadant shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

ITT beats Kadant on 10 of the 17 factors compared between the two stocks.

About ITT

ITT Inc., together with its subsidiaries, manufactures and sells engineered critical components and customized technology solutions for the transportation, industrial, and energy markets in the United States and internationally. The Motion Technologies segment manufactures brake pads, shims, shock absorbers, and energy absorption components; and sealing technologies primarily for the transportation industry, including passenger cars, trucks, light- and heavy-duty commercial and military vehicles, buses, and trains. This segment sells its products under ITT Friction Technologies, KONI, Wolverine Advanced Materials, Axtone, Novitek, and GALT. brand names. The Industrial Process segment provides industrial pumps, valves, and plant optimization and remote monitoring systems and services; and aftermarket solutions, such as replacement parts and services. It serves various customers in industries, such as chemical, energy, mining, and other industrial process markets. This segment sells its products under Goulds Pumps, Bornemann, Engineered Valves, PRO Services, C'treat, i-ALERT, Rheinhütte Pumpen, and Habonim brand names. The Connect & Control Technologies segment designs and manufactures a range of engineered connectors and specialized products for critical applications supporting various markets, including aerospace and defense, industrial, transportation, medical, and energy. This segment provides connector products, such as circular, rectangular, radio frequency, fiber optic, D-sub miniature, micro-miniature, and cable assemblies; and control products consist of highly engineered actuation, flow control, energy absorption, environmental control, and composite component solutions for the aerospace, defense, and industrial markets under Cannon, VEAM, BIW Connector Systems, Aerospace Controls, Enidine, Compact Automation, Neo-Dyn Process Controls, Conoflow, and Micro-Mode brand names. The company was incorporated in 1920 and is headquartered in Stamford, Connecticut.

About Kadant

Kadant Inc. supplies technologies and engineered systems worldwide. It operates in three segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment develops, manufactures, and markets fluid-handling systems and equipment, such as rotary joints, syphons, turbulator bars, expansion joints, and engineered steam and condensate systems; and doctoring, cleaning, and filtration systems and related consumables consisting of doctor systems and holders, doctor blades, cleaning shower and fabric-conditioning systems, forming systems and wear surfaces, and water-filtration systems. The Industrial Processing segment develops, manufactures, and markets ring and rotary debarkers, stranders, chippers, engineered knife systems, industrial automation and control, recycling and approach flow systems, and virgin pulping process equipment for use in the packaging, tissue, wood products, and alternative fuel industries. The Material Handling segment offers conveying and vibratory equipment, and baling products; and manufactures and sells biodegradable absorbent granules for carriers in agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption. The company markets and sells its products, services, and systems through direct sales, independent sales agents, and distributors. The company was formerly known as Thermo Fibertek, Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was incorporated in 1991 and is headquartered in Westford, Massachusetts.