Financial Review: NN (NNBR) versus Its Peers

NN (NASDAQ:NNBR) is one of 436 public companies in the “Machinery” industry, but how does it compare to its peers? We will compare NN to similar companies based on the strength of its earnings, profitability, dividends, risk, analyst recommendations, institutional ownership and valuation.

Analyst Ratings

This is a breakdown of recent recommendations for NN and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NN	1	1	2	1	2.60
NN Competitors	4191	14685	18186	803	2.41

NN currently has a consensus price target of $5.67, indicating a potential upside of 52.33%. As a group, “Machinery” companies have a potential upside of 29.50%. Given NN’s stronger consensus rating and higher possible upside, analysts clearly believe NN is more favorable than its peers.

Institutional & Insider Ownership

53.9% of NN shares are held by institutional investors. Comparatively, 51.7% of shares of all “Machinery” companies are held by institutional investors. 5.6% of NN shares are held by insiders. Comparatively, 14.3% of shares of all “Machinery” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares NN and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NN	-5.43%	43.10%	2.61%
NN Competitors	-1,044.45%	-15.01%	0.54%

Risk & Volatility

NN has a beta of 2.65, meaning that its share price is 165% more volatile than the S&P 500. Comparatively, NN’s peers have a beta of 4.69, meaning that their average share price is 369% more volatile than the S&P 500.

Dividends

NN pays an annual dividend of $0.28 per share and has a dividend yield of 7.5%. NN pays out -32.6% of its earnings in the form of a dividend. As a group, “Machinery” companies pay a dividend yield of 2.7% and pay out 24.6% of their earnings in the form of a dividend. NN is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares NN and its peers revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
NN	$483.01 million	-$34.00 million	-4.33
NN Competitors	$4.65 billion	$364.57 million	3.60

NN’s peers have higher revenue and earnings than NN. NN is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Summary

NN beats its peers on 9 of the 15 factors compared.

About NN

NN, Inc., together with its subsidiaries, designs, manufactures, and sells high-precision components and assemblies for various end markets in the United States and internationally. It operates through two segments, Mobile Solutions and Power Solutions. The Mobile Solutions segment manufactures and sells system critical components for automotive, general industrial, and medical end markets for use in power steering, braking, transmissions, gasoline fuel system, diesel injection, and diesel emissions treatment applications, as well as in heating, ventilation, and air conditioning. The Power Solutions segment designs, manufactures, and sells a range of high-precision metal and plastic components, assemblies, and finished devices used in various applications, such as power control and transportation electrification. Its products include electrical contacts, connectors, contact assemblies, and precision stampings for the electrical, general industrial, automotive, aerospace and defense, and medical end markets. This segment also produces various tools and instruments for the orthopaedics and medical/surgical end markets. NN, Inc. was founded in 1980 and is headquartered in Charlotte, North Carolina.