Financial Analysis: Alfa Laval (OTCMKTS:ALFVY) & Granite Construction (NYSE:GVA)

Alfa Laval (OTCMKTS:ALFVY) and Granite Construction (NYSE:GVA) are both industrials companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Dividends

Alfa Laval pays an annual dividend of $0.61 per share and has a dividend yield of 1.1%. Granite Construction pays an annual dividend of $0.52 per share and has a dividend yield of 0.5%. Alfa Laval pays out 28.9% of its earnings in the form of a dividend. Granite Construction pays out -12.1% 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.

Risk and Volatility

Alfa Laval has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500. Comparatively, Granite Construction has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500.

Profitability

This table compares Alfa Laval and Granite Construction’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alfa Laval	11.63%	18.41%	8.16%
Granite Construction	-3.32%	27.83%	7.17%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Alfa Laval and Granite Construction, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alfa Laval	2	2	4	0	2.25
Granite Construction	2	1	2	1	2.33

Granite Construction has a consensus target price of $158.50, indicating a potential upside of 51.50%. Given Granite Construction’s stronger consensus rating and higher probable upside, analysts clearly believe Granite Construction is more favorable than Alfa Laval.

Earnings and Valuation

This table compares Alfa Laval and Granite Construction”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alfa Laval	$7.12 billion	3.14	$845.40 million	$2.11	25.63
Granite Construction	$4.42 billion	1.03	$193.00 million	($4.31)	-24.27

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

Insider & Institutional Ownership

0.0% of Alfa Laval shares are held by institutional investors. 0.9% of Granite Construction shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Alfa Laval beats Granite Construction on 10 of the 17 factors compared between the two stocks.

About Alfa Laval

Alfa Laval Corporate AB provides heat transfer, separation, and fluid handling products and solutions worldwide. It operates in three divisions: Energy, Food & Water, and Marine. The company offers oil/gas-fired steam and composite steam boilers, exhaust gas economizer, and ballast water treatment systems, and exhaust gas cleaning products. It also provides sensing and control, cleaning validation, condition monitoring, agitators, tank, powder mixers, fittings, and tubes, as well as wall mounted cleaning nozzles, rotary jet and heads; and tank accessories and covers. In addition, the company offers centrifugal, rotary lobe, three screw, twin screw, and circumferential piston pumps. Further, it provides butterfly, control and check, double seal, diaphragm, double seat, regulating, safety, sampling, shutter, single seat, and ball valves. Additionally, the company offers heat exchanger, tube-in-tube heat exchangers, and process shell-and-tube heat exchangers. Furthermore, it provides finned tube air heat, scraped surface heat exchangers, and various plate heat exchangers, wet surface, and HYAC hybrid air coolers. The company also offers decanters and separator related products. It serves energy, utilities, home, personal care, food, dairy, beverage, marine, transportation, pharmaceutical, biotech, water, and wastewater industries. Alfa Laval Corporate AB was founded in 1883 and is headquartered in Lund, Sweden.

About Granite Construction

Granite Construction Incorporated operates as an infrastructure contractor in the United States. It operates through two segments: Construction and Materials segments. The Construction segment engages in the construction and rehabilitation of roads, pavement preservation, bridges, rail lines, airports, marine ports, dams, reservoirs, aqueducts, infrastructure, and site development for use by the public and water-related construction for municipal agencies, commercial water suppliers, industrial facilities, and energy companies; and construction of various complex projects, including infrastructure/site development, mining, public safety, tunnel, solar storage, and power related projects. The Materials segment is involved in the production of aggregates, asphalt concrete, liquid asphalt, and recycled materials production for internal use in our construction projects and sale to third parties. It also offers site preparation, mining, and infrastructure services for residential development, energy development, commercial and industrial sites, railways, residential development, and energy development; and provides construction management professional services. It serves federal agencies, state departments of transportation, local transit authorities, county and city public works departments, school districts and developers, utilities, contractors, landscapers, manufacturers of products requiring aggregate materials, retailers, homeowners, farmers, brokers, and private owners of industrial, commercial, and residential sites. Granite Construction Incorporated was incorporated in 1922 and is headquartered in Watsonville, California.