Contrasting The Timken (TKR) and SKF (SKFRY)

The Timken (NYSE: TKR) and SKF (OTCMKTS:SKFRY) are both mid-cap industrial products companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, earnings and profitability.

Institutional & Insider Ownership

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79.5% of The Timken shares are owned by institutional investors. Comparatively, 0.5% of SKF shares are owned by institutional investors. 11.2% of The Timken shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares The Timken and SKF’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Timken $3.00 billion 1.20 $203.40 million $2.63 17.53
SKF $9.14 billion 1.05 $641.75 million $1.41 14.88

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

Profitability

This table compares The Timken and SKF’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Timken 6.77% 14.55% 6.47%
SKF 7.03% 19.55% 6.80%

Volatility and Risk

The Timken has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500. Comparatively, SKF has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for The Timken and SKF, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Timken 0 1 3 0 2.75
SKF 1 1 1 0 2.00

The Timken presently has a consensus target price of $51.00, suggesting a potential upside of 10.63%. Given The Timken’s stronger consensus rating and higher probable upside, research analysts plainly believe The Timken is more favorable than SKF.

Dividends

The Timken pays an annual dividend of $1.08 per share and has a dividend yield of 2.3%. SKF pays an annual dividend of $0.59 per share and has a dividend yield of 2.8%. The Timken pays out 41.1% of its earnings in the form of a dividend. SKF pays out 41.8% 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. The Timken has increased its dividend for 4 consecutive years.

Summary

The Timken beats SKF on 11 of the 17 factors compared between the two stocks.

The Timken Company Profile

The Timken Company engineers, manufactures, and markets bearings, transmissions, gearboxes, belts, chains, lubrication systems, couplings, industrial clutches and brakes, and related products worldwide. It operates through two segments, Mobile Industries and Process Industries. The Mobile Industries segment offers a portfolio of bearings, seals, lubrication devices, and systems, as well as power transmission components, engineered chains, augers, belts, couplings, clutches and brakes, and related products and maintenance services to original equipment manufacturers (OEMs) and end users of off-highway equipment for the agricultural, construction, mining, outdoor power equipment, and power sports markets; and on-highway vehicles, including passenger cars, light trucks, and medium- and heavy-duty trucks, as well as rail cars and locomotives. It also provides power transmission systems and flight-critical components for civil and military aircraft, which comprise bearings, helicopter transmission systems, rotor-head assemblies, turbine engine components, gears, and housings. This segment sells it parts through a network of authorized automotive and heavy-truck distributors to individual end users, equipment owners, operators, and maintenance shops. The Process Industries segment supplies industrial bearings and assemblies; power transmission components, including gears and gearboxes; and couplings, seals, lubricants, chains, belts, and related products and services to OEMs and end-users in various industries. It also supports aftermarket sales and service needs through its network of authorized industrial distributors; and offers repair and service for bearings and gearboxes, as well as electric motor rewind, repair, and services to end users. The Timken Company was founded in 1899 and is headquartered in North Canton, Ohio.

SKF Company Profile

AB SKF (publ) offers bearings, seals, mechatronics, condition monitoring, lubrication systems, and services. It operates in two segments, Industrial and Automotive. The company's products include bearings, units, and housings; seals; lubrication solutions; linear motion systems; actuation systems, screws, and linear guides and tables; magnetic bearings/permanent magnetic electric motors; mechatronic solutions; maintenance products; condition monitoring systems; power transmission products and solutions; coupling systems; test and measurement equipment; and vehicle aftermarket products, such as wheel end, powertrain, driveline, and steering and suspension products, as well as tools and lubricants. Its services comprise asset management, customer training, engineering consultancy, logistics, mechanical maintenance, and remanufacturing and maintenance services. The company offers its solutions for various industries, including aerospace, agriculture, automation, cars and light trucks, compressors, construction, electric motors, food and beverage, home appliances, industrial fans and pumps, industrial transmissions, machine tools, marine, material handling, medical and health care, metals, mining, mineral processing, ocean energy, oil and gas, portable power tools, power generation, pulp and paper, racing, railways, skates, trucks, trailers and buses, two and three wheelers, and wind energy. AB SKF (publ) markets its products directly, as well as through a network of distributors in North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company was founded in 1907 and is headquartered in Gothenburg, Sweden.

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