Financial Comparison: Simpson Manufacturing (SSD) versus Headwaters (HW)

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

Volatility & Risk

Simpson Manufacturing has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500. Comparatively, Headwaters has a beta of 1.7, indicating that its stock price is 70% more volatile than the S&P 500.

Earnings and Valuation

This table compares Simpson Manufacturing and Headwaters’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Simpson Manufacturing $914.03 million 2.43 $171.24 million $2.05 22.90
Headwaters N/A N/A N/A $0.56 43.29

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

Institutional and Insider Ownership

83.8% of Simpson Manufacturing shares are held by institutional investors. Comparatively, 86.8% of Headwaters shares are held by institutional investors. 0.4% of Simpson Manufacturing shares are held by company insiders. Comparatively, 6.4% of Headwaters shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Simpson Manufacturing 10.78% 10.26% 8.96%
Headwaters 1.98% 5.96% 1.68%

Dividends

Simpson Manufacturing pays an annual dividend of $0.84 per share and has a dividend yield of 1.8%. Headwaters does not pay a dividend. Simpson Manufacturing pays out 41.0% of its earnings in the form of a dividend. Headwaters has raised its dividend for 3 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and price targets for Simpson Manufacturing and Headwaters, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Simpson Manufacturing 0 0 0 0 N/A
Headwaters 1 6 1 0 2.00

Headwaters has a consensus target price of $23.44, indicating a potential downside of 3.31%. Given Headwaters’ higher probable upside, analysts plainly believe Headwaters is more favorable than Simpson Manufacturing.

Summary

Headwaters beats Simpson Manufacturing on 7 of the 13 factors compared between the two stocks.

About Simpson Manufacturing

Simpson Manufacturing Co., Inc., through its subsidiary, Simpson Strong-Tie Company Inc. (SST), designs, engineers and manufactures wood construction products, including connectors, truss plates, fastening systems, fasteners and pre-fabricated lateral systems used in light-frame construction. The Company’s segments are North America, Europe, Asia/Pacific, and Administrative & All Other. The North America segment includes operations primarily in the United States and Canada. The Europe segment includes operations primarily in France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands and Belgium. The Asia/Pacific segment includes operations primarily in Australia, New Zealand, South Africa, China, Taiwan and Vietnam. The Company manufactures concrete construction products used for concrete, masonry, steel construction and for concrete repair, protection and strengthening, including adhesives, chemicals and mechanical anchors.

About Headwaters

Headwaters Incorporated is a building materials company operating in the building products and construction materials sectors. The Company sells building products, such as manufactured architectural stone, siding accessory products, roof products and concrete block. The Company’s operating segments include building products, construction materials and energy technology. It also markets coal combustion products (CCPs), including fly ash, which is used as a partial replacement for Portland cement in concrete. The Building Products segment is engaged in designing, manufacturing and marketing of siding accessories used in residential repair and remodeling, and new residential construction applications. The Materials segment markets fly ash in the construction materials sector. The Energy Technology segment is involved in heavy oil upgrading processes through the sale of its HCAT catalyst material. It sells catalytic materials to certain refineries engaged in heavy oil upgrading.

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