GATX (NYSE:GATX) and Ferguson (NYSE:FERG) Head-To-Head Review

GATX (NYSE:GATX) and Ferguson (NYSE:FERG) are both industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, risk, dividends, analyst recommendations, institutional ownership and earnings.

Insider and Institutional Ownership

93.1% of GATX shares are held by institutional investors. Comparatively, 82.0% of Ferguson shares are held by institutional investors. 1.9% of GATX shares are held by insiders. Comparatively, 0.2% of Ferguson shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk and Volatility

GATX has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500. Comparatively, Ferguson has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for GATX and Ferguson, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GATX	0	0	4	0	3.00
Ferguson	0	6	10	2	2.78

GATX presently has a consensus target price of $219.00, suggesting a potential upside of 29.52%. Ferguson has a consensus target price of $285.57, suggesting a potential upside of 28.87%. Given GATX’s stronger consensus rating and higher probable upside, equities research analysts plainly believe GATX is more favorable than Ferguson.

Profitability

This table compares GATX and Ferguson’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GATX	17.94%	10.43%	2.12%
Ferguson	6.82%	37.24%	12.31%

Dividends

GATX pays an annual dividend of $2.64 per share and has a dividend yield of 1.6%. Ferguson pays an annual dividend of $3.56 per share and has a dividend yield of 1.6%. GATX pays out 26.1% of its earnings in the form of a dividend. Ferguson 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. GATX has raised its dividend for 15 consecutive years.

Earnings & Valuation

This table compares GATX and Ferguson”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GATX	$1.74 billion	3.43	$333.30 million	$10.10	16.74
Ferguson	$31.32 billion	1.37	$1.86 billion	$8.51	26.04

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

Summary

GATX beats Ferguson on 10 of the 18 factors compared between the two stocks.

About GATX

GATX Corporation, together its subsidiaries, operates as railcar leasing company in the United States, Canada, Mexico, Europe, and India. It operates through three segments: Rail North America, Rail International, and Portfolio Management. The company leases tank and freight railcars, and locomotives for petroleum, chemical, food/agriculture, and transportation industries. It also offers maintenance services, including the interior cleaning of railcars, routine maintenance and repair of car body and safety appliances, regulatory compliance works, wheelset replacements, interior blast and lining, exterior blast and painting, and car stenciling services. In addition, the company manufactures commercial aircraft jet engines and leases aircraft spare engines; and owns and manages tank containers that are leased to chemical, industrial gas, energy, food, cryogenic and pharmaceutical industries, and tank container operators, as well as provides tank container sourcing, remarketing, and inspection and maintenance services. As of December 31, 2023, it owned and operated a fleet of approximately 148,500 railcars; 493 four-axle and 30 six-axle locomotives; 399 aircraft spare engines; and 23,931 tank containers. GATX Corporation was founded in 1898 and is headquartered in Chicago, Illinois.

About Ferguson

Ferguson Enterprises Inc. distributes plumbing and heating products in North America. The company provides expertise, solutions, and products, including infrastructure, plumbing, appliances, fire, and fabrication, as well as heating, ventilation, and air conditioning (HVAC) to residential and non-residential customers. It also supplies specialist water and wastewater treatment products to residential, commercial, and infrastructure contractors, as well as supplies pipe, valves, and fittings solutions to industrial customers. In addition, it offers customized solutions, such as virtual design, fabrication, valve actuation, pre-assembly, kitting, installation, and project management services, as well as after-sales support that comprises warranty, credit, project-based billing, returns and maintenance, and repair and operations support. The company sells its products through a network of distribution centers, branches, counter service and specialist sales associates, showroom consultants, and e-commerce channels. Ferguson Enterprises Inc. was founded in 1953 and is headquartered in Newport News, Virginia.