Tower International (NYSE: TOWR) and China Automotive Systems (NASDAQ:CAAS) are both small-cap auto/tires/trucks companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, dividends, risk, valuation, profitability and analyst recommendations.
Insider & Institutional Ownership
88.7% of Tower International shares are owned by institutional investors. Comparatively, 5.0% of China Automotive Systems shares are owned by institutional investors. 6.2% of Tower International shares are owned by company insiders. Comparatively, 62.2% of China Automotive Systems shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
This table compares Tower International and China Automotive Systems’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|China Automotive Systems||5.43%||8.30%||4.05%|
Tower International pays an annual dividend of $0.44 per share and has a dividend yield of 2.0%. China Automotive Systems does not pay a dividend. Tower International pays out 12.9% of its earnings in the form of a dividend.
Valuation & Earnings
This table compares Tower International and China Automotive Systems’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Tower International||$1.91 billion||0.24||$185.76 million||$3.42||6.51|
|China Automotive Systems||$481.15 million||0.37||$41.16 million||$0.82||6.82|
Tower International has higher revenue and earnings than China Automotive Systems. Tower International is trading at a lower price-to-earnings ratio than China Automotive Systems, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Tower International has a beta of 2.65, meaning that its stock price is 165% more volatile than the S&P 500. Comparatively, China Automotive Systems has a beta of 2.2, meaning that its stock price is 120% more volatile than the S&P 500.
This is a summary of recent ratings and recommmendations for Tower International and China Automotive Systems, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|China Automotive Systems||0||0||1||0||3.00|
Tower International presently has a consensus target price of $32.67, suggesting a potential upside of 46.82%. China Automotive Systems has a consensus target price of $7.50, suggesting a potential upside of 34.17%. Given Tower International’s higher possible upside, equities analysts clearly believe Tower International is more favorable than China Automotive Systems.
Tower International beats China Automotive Systems on 9 of the 15 factors compared between the two stocks.
Tower International Company Profile
Tower International, Inc. is a global manufacturer of engineered automotive structural metal components and assemblies primarily serving original equipment manufacturers (OEMs). The Company’s product portfolio includes body-structure stampings, frame and other chassis structures, and welded assemblies for small and large cars, crossovers, pickups and sport utility vehicles (SUVs). The Company offers body structures and assemblies, including structural metal components, such as body pillars, roof rails and side sills. The Company also offers Class A surfaces and assemblies, which are components of the exterior skin of the vehicle, such as body sides, hoods, doors, fenders and pickup truck boxes. The Company’s lower vehicle frames and structures include chassis structures. Its products include pickup truck and SUV full frames, automotive engine and rear suspension cradles, floor pan components and cross members that form the basic lower body structure of the vehicle.
China Automotive Systems Company Profile
China Automotive Systems, Inc., (China Automotive) is a holding company. The Company, through its subsidiary, Great Genesis Holdings Limited (Genesis), owns interests in over eight Sino-joint ventures and over five subsidiaries in the People’s Republic of China (PRC), which manufacture power steering systems and/or related products for various segments of the automobile industry. Genesis also owns interests in a Brazil-based trading company, which engages mainly in the import and sales of automotive parts in Brazil. Henglong USA Corporation (HLUSA), which is a subsidiary of the Company, engages in marketing of automotive parts in North America, and provides after sales service and research and development support. The Company’s geographical segments include the United States, China and other foreign countries. One of its subsidiaries, Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., focuses on power steering parts for light duty vehicles.
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