Rockwell Automation (NYSE: ROK) and Hollysys Automation Technologies (NASDAQ:HOLI) are both industrial products companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, valuation, profitability, institutional ownership, risk, analyst recommendations and earnings.

Profitability

This table compares Rockwell Automation and Hollysys Automation Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rockwell Automation 13.04% 40.71% 12.03%
Hollysys Automation Technologies 15.73% 12.30% 8.48%

Earnings & Valuation

This table compares Rockwell Automation and Hollysys Automation Technologies’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rockwell Automation $6.18 billion 3.87 $1.22 billion $6.20 30.04
Hollysys Automation Technologies $431.94 million 3.10 $80.86 million $1.15 19.30

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

Insider & Institutional Ownership

73.6% of Rockwell Automation shares are held by institutional investors. Comparatively, 68.0% of Hollysys Automation Technologies shares are held by institutional investors. 1.7% of Rockwell Automation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings for Rockwell Automation and Hollysys Automation Technologies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rockwell Automation 1 11 2 0 2.07
Hollysys Automation Technologies 1 1 2 0 2.25

Rockwell Automation presently has a consensus target price of $159.42, indicating a potential downside of 14.42%. Hollysys Automation Technologies has a consensus target price of $19.65, indicating a potential downside of 11.44%. Given Hollysys Automation Technologies’ stronger consensus rating and higher probable upside, analysts clearly believe Hollysys Automation Technologies is more favorable than Rockwell Automation.

Risk and Volatility

Rockwell Automation has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500. Comparatively, Hollysys Automation Technologies has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500.

Dividends

Rockwell Automation pays an annual dividend of $3.04 per share and has a dividend yield of 1.6%. Hollysys Automation Technologies pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Rockwell Automation pays out 49.0% of its earnings in the form of a dividend. Hollysys Automation Technologies pays out 10.4% 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. Rockwell Automation has increased its dividend for 7 consecutive years. Rockwell Automation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Rockwell Automation beats Hollysys Automation Technologies on 11 of the 16 factors compared between the two stocks.

About Rockwell Automation

Rockwell Automation, Inc. (Rockwell Automation) is a provider of industrial automation power, control and information solutions for manufacturers. The Company operates through two segments: Architecture & Software and Control Products & Solutions. The Architecture & Software segment contains various hardware, software and communication components of the Company’s integrated control and information architecture capable of controlling the customer’s industrial processes and connecting with their manufacturing enterprise. Architecture & Software has a portfolio of products, including Control platforms that perform multiple control disciplines and monitoring of applications, including discrete, batch and continuous process, drives control, motion control and machine safety control. The Control Products & Solutions segment portfolio includes low and medium voltage electro-mechanical and electronic motor starters, signaling devices, termination and protection devices, relays and timers.

About Hollysys Automation Technologies

Hollysys Automation Technologies Ltd. is a provider of automation and control technologies, and products. The Company’s segments include Industrial Automation (IA), Rail Transportation (rail), Mechanical and Electrical (M&E), and Miscellaneous. Its technologies are applied through its industrial automation solution suite, including the Distributed Control Systems, Programmable Logic Controller, Real-time Management Information System, HolliAS Asset Management System, Operator Training System, Batch Application Package, Advanced Process Control Package (HolliAS APC Suite), Safety Instrumentation System (SIS), railway signaling system of Train Control Center, Automatic Train Protection, Subway Supervisory and Control platform, nuclear power non-safety automation and control system HolliAs-NMS DCS and other products. It serves customers in the industrial, railway, subway, nuclear power, and mechanical and electronic industries in China, Southeast Asia, India, Europe and the Middle East.

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