Critical Review: Dorman Products (DORM) vs. Briggs & Stratton Corporation (NYSE:BGG)

Dorman Products (NASDAQ: DORM) and Briggs & Stratton Corporation (NYSE:BGG) are both auto/tires/trucks companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, earnings, profitability, dividends, analyst recommendations and institutional ownership.

Profitability

This table compares Dorman Products and Briggs & Stratton Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dorman Products 12.66% 18.64% 15.79%
Briggs & Stratton Corporation 2.33% 11.69% 3.79%

Dividends

Briggs & Stratton Corporation pays an annual dividend of $0.56 per share and has a dividend yield of 2.4%. Dorman Products does not pay a dividend. Briggs & Stratton Corporation pays out 58.3% of its earnings in the form of a dividend. Dorman Products has raised its dividend for 5 consecutive years.

Analyst Recommendations

This is a summary of current recommendations and price targets for Dorman Products and Briggs & Stratton Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dorman Products 0 3 0 0 2.00
Briggs & Stratton Corporation 0 1 1 0 2.50

Dorman Products currently has a consensus price target of $78.00, indicating a potential upside of 5.16%. Briggs & Stratton Corporation has a consensus price target of $23.50, indicating a potential downside of 0.34%. Given Dorman Products’ higher possible upside, research analysts plainly believe Dorman Products is more favorable than Briggs & Stratton Corporation.

Earnings and Valuation

This table compares Dorman Products and Briggs & Stratton Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Dorman Products $892.77 million 2.82 $197.74 million $3.28 22.61
Briggs & Stratton Corporation $1.81 billion 0.56 $134.42 million $0.96 24.56

Dorman Products has higher revenue, but lower earnings than Briggs & Stratton Corporation. Dorman Products is trading at a lower price-to-earnings ratio than Briggs & Stratton Corporation, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

76.6% of Dorman Products shares are held by institutional investors. Comparatively, 85.4% of Briggs & Stratton Corporation shares are held by institutional investors. 11.7% of Dorman Products shares are held by company insiders. Comparatively, 4.7% of Briggs & Stratton Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Dorman Products has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500. Comparatively, Briggs & Stratton Corporation has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.

Summary

Dorman Products beats Briggs & Stratton Corporation on 10 of the 17 factors compared between the two stocks.

About Dorman Products

Dorman Products, Inc. is a supplier of replacement parts and fasteners for passenger cars, light trucks and heavy duty trucks in the automotive aftermarket. As of December 31, 2016, the Company distributed and marketed approximately 155,000 different stock keeping units (SKU’s) of automotive replacement parts and fasteners. As of December 31, 2016, approximately 83% of its products were sold under brands that it owned and the remainder of its products were sold for resale under customers’ private labels, other brands or in bulk. Its products are sold in the United States through automotive aftermarket retailers, national, regional and local warehouse distributors, and specialty markets, and salvage yards. It also distributes automotive replacement parts outside the United States, with sales primarily into Canada, Mexico, Europe, the Middle East, and Australia. Its parts are marketed under the OE Solutions, TECHoice, AutoGrade, Conduct-Tite, FirstStop and HD Solutions brand names.

About Briggs & Stratton Corporation

Briggs & Stratton Corporation is a producer of gasoline engines for outdoor power equipment. The Company designs, manufactures, markets, sells and services the various products for original equipment manufacturers (OEMs) around the world. It also markets and sells related service parts and accessories for its engines. Its subsidiary is a marketer of pressure washers, and it is a designer, manufacturer and marketer of power generation, lawn and garden, turf care and job site products through its Simplicity, Snapper, Snapper Pro, Ferris, PowerBoss, Allmand, Billy Goat, Murray, Branco and Victa brands. It operates in over 100 countries on six continents. It operates through two segments: Engines and Products. Its Engines segment sells engines around the world, primarily to OEMs of lawn and garden equipment and other gasoline engine-powered equipment. Its Products segment designs, manufactures and markets a range of outdoor power equipment, job site products and related accessories.

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