Sims Metal Management (SMSMY) vs. Pool (POOL) Critical Analysis

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Pool (NASDAQ:POOL) and Sims Metal Management (OTCMKTS:SMSMY) are both consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Institutional & Insider Ownership

93.8% of Pool shares are owned by institutional investors. Comparatively, 0.0% of Sims Metal Management shares are owned by institutional investors. 6.0% of Pool shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Pool has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, Sims Metal Management has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Pool and Sims Metal Management, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pool 0 4 0 0 2.00
Sims Metal Management 0 0 0 0 N/A

Pool currently has a consensus price target of $154.25, suggesting a potential upside of 7.48%. Given Pool’s higher probable upside, analysts clearly believe Pool is more favorable than Sims Metal Management.

Profitability

This table compares Pool and Sims Metal Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pool 8.21% 78.04% 17.51%
Sims Metal Management N/A N/A N/A

Earnings & Valuation

This table compares Pool and Sims Metal Management’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pool $2.79 billion 2.08 $191.63 million $3.99 35.97
Sims Metal Management $3.82 billion 0.42 $153.49 million N/A N/A

Pool has higher earnings, but lower revenue than Sims Metal Management.

Dividends

Pool pays an annual dividend of $1.80 per share and has a dividend yield of 1.3%. Sims Metal Management pays an annual dividend of $0.39 per share and has a dividend yield of 4.9%. Pool pays out 45.1% of its earnings in the form of a dividend. Pool has raised its dividend for 7 consecutive years.

Summary

Pool beats Sims Metal Management on 9 of the 13 factors compared between the two stocks.

About Pool

Pool Corporation distributes swimming pool supplies, equipment, and related leisure products in North America, Europe, South America, and Australia. The company offers maintenance products, including chemicals, supplies, and pool accessories; repair and replacement parts for pool equipment, such as cleaners, filters, heaters, pumps, and lights; packaged pool kits comprising walls, liners, braces, and coping for in-ground and above-ground pools; pool equipment and components for new pool construction and the remodeling of existing pools; and irrigation and landscape products consisting of irrigation system components, and professional lawn care equipment and supplies. It also provides building materials, such as concrete, plumbing and electrical components, functional and decorative pool surfaces, decking materials, tiles, hardscapes, and natural stones for use in pool installations and remodeling; and commercial products, such as ASME heaters, safety equipment, and commercial pumps and filters. In addition, the company offers discretionary recreational and related outdoor lifestyle products that enhance consumers' use and enjoyment of outdoor living spaces, such as spas, grills, and components for outdoor kitchens. It serves swimming pool remodelers and builders; specialty retailers that sell swimming pool supplies; swimming pool repair and service businesses; irrigation construction and landscape maintenance contractors; and golf course and other commercial customers. As of December 31, 2017, the company operated 351 sales centers. Pool Corporation was founded in 1993 and is headquartered in Covington, Louisiana.

About Sims Metal Management

Sims Metal Management Limited engages in buying, processing, and selling ferrous and non-ferrous recycled metals. The company operates through five segments: North America Metals, Investment in SA Recycling, Australia/New Zealand, Metals, Europe Metals, and Global E-Recycling. It is involved in the collection, processing, and trading of iron and steel secondary raw materials; and other metal alloys and residues, principally aluminum, lead, copper, zinc, and nickel bearing materials. The company also engages in the provision of environmentally responsible solutions for the disposal of post-consumer electronic products, including IT assets recycled for commercial customers; and environmentally responsible recycling of negative value materials, such as refrigerators, and other electrical and electronic equipment. In addition, it provides secondary processing and other services comprising the melting, refining, and ingoting of non-ferrous metals and others. The company was formerly known as Sims Group Limited and changed its name to Sims Metal Management Limited in November 2008. Sims Metal Management Limited was founded in 1917 and is headquartered in Rye, New York.

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