Analyzing Fastenal (NASDAQ:FAST) and Ryerson (NYSE:RYZ)

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

Insider & Institutional Ownership

94.8% of Ryerson shares are owned by institutional investors. Comparatively, 81.4% of Fastenal shares are owned by institutional investors. 6.6% of Ryerson shares are owned by company insiders. Comparatively, 0.3% of Fastenal shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Ryerson has a beta of 1.65, indicating that its share price is 65% more volatile than the S&P 500. Comparatively, Fastenal has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Ryerson and Fastenal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ryerson	1	2	0	0	1.67
Fastenal	2	5	5	0	2.25

Fastenal has a consensus price target of $49.17, indicating a potential downside of 3.84%. Given Fastenal’s stronger consensus rating and higher probable upside, analysts clearly believe Fastenal is more favorable than Ryerson.

Dividends

Ryerson pays an annual dividend of $0.75 per share and has a dividend yield of 2.9%. Fastenal pays an annual dividend of $1.04 per share and has a dividend yield of 2.0%. Ryerson pays out -60.5% of its earnings in the form of a dividend. Fastenal pays out 88.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fastenal has increased its dividend for 26 consecutive years. Ryerson is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Ryerson and Fastenal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ryerson	-0.56%	-0.62%	-0.21%
Fastenal	15.45%	34.03%	26.16%

Valuation & Earnings

This table compares Ryerson and Fastenal”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ryerson	$5.84 billion	0.23	-$56.40 million	($1.24)	-20.70
Fastenal	$8.20 billion	7.15	$1.26 billion	$1.18	43.33

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

Summary

Fastenal beats Ryerson on 12 of the 17 factors compared between the two stocks.

About Ryerson

Ryerson Holding Corporation, together with its subsidiaries, processes and distributes industrial metals in the United States, Canada, Mexico, and China. It offers a line of products in carbon steel, stainless steel, alloy steels, and aluminum, as well as nickel and red metals in various shapes and forms, including coils, sheets, rounds, hexagons, square and flat bars, plates, structural, and tubing. The company also provides various processing services, such as bending, beveling, blanking, blasting, burning, cutting-to-length, drilling, embossing, flattening, forming, grinding, laser cutting, machining, notching, painting, perforating, polishing, punching, rolling, sawing, scribing, shearing, slitting, stamping, tapping, threading, welding, or other techniques to process materials. It serves various industries, including commercial ground transportation, metal fabrication and machine shops, industrial machinery and equipment manufacturing, consumer durable equipment, HVAC manufacturing, construction equipment manufacturing, food processing and agricultural equipment manufacturing, and oil and gas. The company was founded in 1842 and is headquartered in Chicago, Illinois.

About Fastenal

Fastenal Company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, North America, and internationally. It offers fasteners, and related industrial and construction supplies under the Fastenal name. The company’s fastener products include threaded fasteners, bolts, nuts, screws, studs, and related washers that are used in manufactured products and construction projects, as well as in the maintenance and repair of machines. It also offers miscellaneous supplies and hardware, including pins, machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories. The company serves the manufacturing market comprising original equipment manufacturers; maintenance, repair, and operations customers; non-residential construction market; farmers, truckers, railroads, mining companies, schools, and retail trades; and oil exploration, production, and refinement companies, as well as federal, state, and local governmental entities. Fastenal Company was founded in 1967 and is headquartered in Winona, Minnesota.