Comparing Disco (OTCMKTS:DSCSY) and Secom (OTCMKTS:SOMLY)

Disco (OTCMKTS:DSCSY) and Secom (OTCMKTS:SOMLY) are both large-cap industrial products companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, institutional ownership, earnings and risk.

Profitability

This table compares Disco and Secom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Disco	28.29%	26.19%	19.24%
Secom	8.59%	7.26%	4.87%

Dividends

Disco pays an annual dividend of $0.19 per share and has a dividend yield of 0.7%. Secom pays an annual dividend of $0.18 per share and has a dividend yield of 1.0%. Disco pays out 35.2% of its earnings in the form of a dividend. Secom pays out 21.4% 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. Secom is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Disco has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500. Comparatively, Secom has a beta of 0.41, meaning that its stock price is 59% less volatile than the S&P 500.

Institutional and Insider Ownership

0.0% of Disco shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations for Disco and Secom, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Disco	0	0	0	0	N/A
Secom	0	0	0	0	N/A

Valuation & Earnings

This table compares Disco and Secom’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Disco	$2.13 billion	13.25	$581.02 million	$0.54	48.25
Secom	$8.00 billion	N/A	$706.22 million	$0.84	21.87

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

Summary

Disco beats Secom on 6 of the 11 factors compared between the two stocks.

About Disco

Disco Corporation manufactures and sells precision cutting, grinding, and polishing machines in Japan and internationally. Its precision machines include dicing saws, laser saws, grinders, polishers, wafer mounters, die separators, surface planers, and waterjet saws. The company also offers precision processing tools, such as dicing blades, grinding wheels, and dry polishing wheels; and other products, such as accessory equipment. In addition, it is involved in the disassembly and recycling of precision cutting, grinding, and polishing machines, as well as provides training services for the maintenance and operation of its products. Further, the company leases precision machines; and purchases and sells used machines. Additionally, it manufactures precision diamond abrasive tools, as well as offers chargeable processing services. The company was founded in 1937 and is headquartered in Tokyo, Japan.

About Secom

SECOM CO., LTD., together with its subsidiaries, provides security services in Japan and internationally. The company operates through Security Services, Fire Protection Services, Medical Services, Insurance Services, Geospatial Information Services, BPO and ICT Services, and Other Services. The Security Services segment offers static guard, armored car, merchandise, and other services, as well as online security systems. The Fire Protection Services segment provides fire alarm systems, fire extinguishing systems, and maintenance services to office buildings, production facilities, tunnels, cultural properties, ships, and residences. The Medical Services segment offers home nursing, pharmaceutical dispensing, home delivery services, health and preventative care services, and personal and outpatient care services; and cloud-based medical reporting services and SECOM LINKus application. This segment also operates the general hospital and residences for seniors; and sells medical equipment and pharmaceuticals. The Insurance Services Segment provides fire insurance, automobile insurance, and cancer treatment insurance services. The Geospatial Information Services segment offers geospatial information services to public-sector entities, such as national and local governments; private sector customers; and overseas government agencies. The BPO and ICT Services segment provides contact centers and back office support services, data center, disaster preparedness, information security, and cloud-based services, as well as SaaS solutions. The Other Services segment offers real estate leasing, construction, and installation services. The company was incorporated in 1962 and is headquartered in Tokyo, Japan.