Ternium (NYSE:TX) and ThyssenKrupp (OTCMKTS:TKAMY) are both prominent players in the basic materials sector, yet their financial profiles and investment potential diverge significantly. This article evaluates both companies on several key metrics, including earnings strength, risk exposure, valuation, dividends, analyst ratings, institutional ownership, and overall profitability.
Dividend Performance and Payout Ratios
Ternium offers a robust annual dividend of $1.80 per share, translating to a yield of 4.9%. In contrast, ThyssenKrupp provides a much lower annual dividend of $0.09 per share, resulting in a yield of just 0.8%. Ternium maintains a dividend payout ratio of 60.6%, indicating a sustainable approach to returning earnings to shareholders. Conversely, ThyssenKrupp has a negative payout ratio of -6.3%, suggesting that it is not currently distributing dividends from earnings.
Both companies exhibit healthy financial practices and should be able to meet their dividend obligations in the foreseeable future, but Ternium’s stronger dividend performance positions it more favorably for income-seeking investors.
Ownership and Market Confidence
Institutional investors hold 12.0% of Ternium’s shares, reflecting a level of confidence in the company’s long-term growth potential. On the other hand, ThyssenKrupp has no institutional ownership reported, which may signal a lack of confidence among larger investment entities. The absence of insider ownership in Ternium further emphasizes its appeal, with institutional holdings suggesting robust interest from hedge funds and major asset managers.
Financial Metrics and Valuation
A financial comparison reveals that Ternium possesses higher earnings per share (EPS) despite having lower overall revenue than ThyssenKrupp. This indicates that Ternium is more efficient in converting sales into profits. Furthermore, ThyssenKrupp trades at a lower price-to-earnings ratio than Ternium, indicating it might be the more affordable stock option at present.
When examining profitability, Ternium outperforms ThyssenKrupp in key metrics such as net margins and return on equity. This financial strength positions Ternium as a more lucrative investment choice.
Analyst sentiment also favors Ternium. According to MarketBeat.com, the company has a consensus price target of $34.69, suggesting a potential downside of 5.82%. Analysts generally recommend Ternium over ThyssenKrupp, highlighting a stronger consensus rating and perceived upside for investors.
Company Profiles
Ternium S.A., founded in 1961 and headquartered in Luxembourg City, Luxembourg, operates in the steel industry with a focus on manufacturing and distributing various steel products. Its segments include Steel, Mining, and Usiminas. The company is also involved in the exploration and exploitation of iron ore, along with offering engineering and renewable energy services.
ThyssenKrupp AG, established in 1811 and based in Essen, Germany, operates across multiple sectors, including Automotive Technology, Decarbon Technologies, and Steel Europe. The company provides a diverse range of products and services, from automotive components to advanced manufacturing solutions.
In conclusion, Ternium consistently outperforms ThyssenKrupp across most financial metrics, making it a more attractive investment option. With its strong dividend yield, institutional backing, and superior profitability, Ternium demonstrates a compelling case for investors looking to enter the basic materials market.
