Contrasting Encore Wire (WIRE) & Arconic (ARNC)


Encore Wire (NASDAQ: WIRE) and Arconic (NYSE:ARNC) are both industrial products companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, dividends, earnings and risk.

Profitability

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This table compares Encore Wire and Arconic’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Encore Wire 5.76% 8.94% 7.74%
Arconic -0.57% 11.29% 3.20%

Volatility & Risk

Encore Wire has a beta of 2, indicating that its stock price is 100% more volatile than the S&P 500. Comparatively, Arconic has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.


Insider and Institutional Ownership

88.9% of Encore Wire shares are held by institutional investors. Comparatively, 80.5% of Arconic shares are held by institutional investors. 3.7% of Encore Wire shares are held by company insiders. Comparatively, 0.2% of Arconic shares are held by company 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.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Encore Wire and Arconic, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Encore Wire 0 1 1 0 2.50
Arconic 0 4 5 0 2.56

Encore Wire currently has a consensus target price of $56.00, indicating a potential upside of 0.36%. Arconic has a consensus target price of $29.78, indicating a potential upside of 29.69%. Given Arconic’s stronger consensus rating and higher probable upside, analysts clearly believe Arconic is more favorable than Encore Wire.

Valuation and Earnings

This table compares Encore Wire and Arconic’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Encore Wire $1.16 billion 1.00 $67.01 million $2.61 21.38
Arconic $12.96 billion 0.86 -$74.00 million $1.22 18.82

Encore Wire has higher earnings, but lower revenue than Arconic. Arconic is trading at a lower price-to-earnings ratio than Encore Wire, indicating that it is currently the more affordable of the two stocks.

Dividends

Encore Wire pays an annual dividend of $0.08 per share and has a dividend yield of 0.1%. Arconic pays an annual dividend of $0.24 per share and has a dividend yield of 1.0%. Encore Wire pays out 3.1% of its earnings in the form of a dividend. Arconic pays out 19.7% 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.


Summary

Encore Wire beats Arconic on 10 of the 16 factors compared between the two stocks.

Encore Wire Company Profile

Encore Wire Corporation manufactures and sells electrical building wire and cable products for interior electrical wiring in the United States. Its products include NM-B cable for use as interior wiring in homes, apartments, and manufactured housing; THHN/THWN-2, metal-clad, and armored cables for use primarily as wiring in commercial and industrial buildings; UF-B cables; XHHW-2 cables; RHH/RHW-2 cables; and other types of wire products. The company markets its products primarily through independent manufacturers' representatives to wholesale electrical distributors. Encore Wire Corporation was founded in 1989 and is headquartered in McKinney, Texas.


Arconic Company Profile

Arconic Inc. engineers, manufactures, and sells lightweight metals of aluminum, titanium, and nickel worldwide. It operates through three segments: Engineered Products and Solutions, Global Rolled Products, and Transportation and Construction Solutions. The Engineered Products and Solutions produces and sells fastening systems and seamless rolled rings; investment castings, including airfoils and forged jet engine components; and extruded, machined, and formed aircraft parts, as well as various forged, extruded, and machined metal products. This segment serves commercial and defense aerospace, commercial transportation, and power generation end markets. The Global Rolled Products segment produces and sells aluminum sheets and plates; and aseptic foils. This segment serves commercial and defense aerospace, commercial transportation, and power generation end markets. The Transportation and Construction Solutions segment produces and sells integrated aluminum structural systems, architectural extrusions, and forged aluminum commercial vehicle wheels, as well as aluminum products for the industrial products end market. This segment serves nonresidential building and construction, and commercial transportation end markets. The company sells its products directly to customers and through distributors. Arconic Inc. was founded in 2016 and is based in New York, New York.