Reviewing Simpson Manufacturing (NYSE:SSD) and Obayashi (OTCMKTS:OBYCF)

Simpson Manufacturing (NYSE:SSD) and Obayashi (OTCMKTS:OBYCF) are both construction companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, risk and profitability.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Simpson Manufacturing and Obayashi, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Simpson Manufacturing	0	2	3	0	2.60
Obayashi	0	0	0	0	0.00

Simpson Manufacturing currently has a consensus price target of $214.75, indicating a potential upside of 15.92%. Given Simpson Manufacturing’s stronger consensus rating and higher probable upside, research analysts clearly believe Simpson Manufacturing is more favorable than Obayashi.

Volatility and Risk

Simpson Manufacturing has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500. Comparatively, Obayashi has a beta of 0.21, suggesting that its share price is 79% less volatile than the S&P 500.

Institutional and Insider Ownership

93.7% of Simpson Manufacturing shares are held by institutional investors. 0.3% of Simpson Manufacturing shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Simpson Manufacturing and Obayashi’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Simpson Manufacturing	14.92%	17.72%	11.72%
Obayashi	6.70%	10.48%	4.28%

Earnings and Valuation

This table compares Simpson Manufacturing and Obayashi”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Simpson Manufacturing	$2.33 billion	3.27	$345.08 million	$8.53	21.72
Obayashi	$17.18 billion	0.84	$1.15 billion	$1.67	12.16

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

Summary

Simpson Manufacturing beats Obayashi on 12 of the 14 factors compared between the two stocks.

About Simpson Manufacturing

Simpson Manufacturing Co., Inc., through its subsidiaries, designs, engineers, manufactures, and sells structural solutions for wood, concrete, and steel connections. The company offers wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls, and pre-fabricated lateral systems for use in light-frame construction; and concrete construction products comprising adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools, fiber-reinforced materials, and other repair products for use in concrete, masonry, and steel construction, as well as grouts, coatings, sealers, mortars, fiberglass and fiber-reinforced polymer systems, and asphalt products for use in concrete construction repair, and strengthening and protection products. It also provides connectors and lateral products for wood framing, timber and offsite construction, structural steel construction, and cold-formed steel applications; and mechanical and adhesive anchors for concrete and masonry construction applications. In addition, the company offers engineering and design services, as well as software solutions that facilitate the specification, selection, and use of its products. It markets its products to the residential construction, light industrial and commercial construction, infrastructure construction, remodeling, and do-it-yourself markets in the United States, Canada, France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands, Belgium, Spain, Italy, Romania, Sweden, Norway, Australia, New Zealand, China, Taiwan, and Vietnam. The company was founded in 1956 and is headquartered in Pleasanton, California.

About Obayashi

Obayashi Corporation engages in the construction business in Japan, North America, Asia, the Middle East, Europe, and Oceania. The company constructs buildings, including offices, condominiums, commercial facilities, factories, hospitals, and schools; and civil engineering projects, such as tunnels, bridges, dams, river works, urban civil engineering structures, railroads, and expressways. It is also involved in the development and leasing of real estate properties in various locations, primarily in urban areas, as well as property management activities; solar, biomass, geothermal, and wind power generation business; and PPP and agriculture business. In addition, the company provides non-life insurance agency business. Further, it engages in the provision of urban redevelopment, contracted operations, and facility management services, as well as M&E design and construction activities. The company was founded in 1892 and is headquartered in Tokyo, Japan.