Lear (NYSE:LEA) and China Automotive Systems (NASDAQ:CAAS) are both auto/tires/trucks companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, earnings, risk and valuation.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Lear and China Automotive Systems, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lear 0 9 7 0 2.44
China Automotive Systems 0 0 1 0 3.00

Lear presently has a consensus price target of $149.57, indicating a potential upside of 23.90%. Given Lear’s higher probable upside, research analysts clearly believe Lear is more favorable than China Automotive Systems.

Dividends

Lear pays an annual dividend of $3.00 per share and has a dividend yield of 2.5%. China Automotive Systems does not pay a dividend. Lear pays out 16.5% of its earnings in the form of a dividend.

Risk & Volatility

Lear has a beta of 1.48, meaning that its share price is 48% more volatile than the S&P 500. Comparatively, China Automotive Systems has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500.

Valuation & Earnings

This table compares Lear and China Automotive Systems’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lear $21.15 billion 0.35 $1.15 billion $18.22 6.63
China Automotive Systems $496.16 million 0.12 $2.38 million $0.08 23.38

Lear has higher revenue and earnings than China Automotive Systems. Lear 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.

Profitability

This table compares Lear and China Automotive Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lear 4.38% 23.18% 8.35%
China Automotive Systems 0.26% 0.37% 0.17%

Insider & Institutional Ownership

89.4% of Lear shares are owned by institutional investors. Comparatively, 2.7% of China Automotive Systems shares are owned by institutional investors. 0.4% of Lear shares are owned by insiders. Comparatively, 62.6% of China Automotive Systems shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Lear beats China Automotive Systems on 11 of the 16 factors compared between the two stocks.

Lear Company Profile

Lear Corporation designs, develops, engineers, manufactures, assembles, and supplies automotive seating, and electrical distribution systems and related components for automotive original equipment manufacturers worldwide. It operates in two segments, Seating and E-Systems. The Seating segment offers leather and fabric products, seat trim covers, recliner mechanisms, seat tracks and foams, seat structures and mechanisms, and headrests for automobiles and light trucks, compact cars, and sport utility vehicles; and heating and cooling systems. The E-Systems segment offers electrical distribution systems that route electrical signals and manage electrical power within the vehicle for traditional vehicle architectures, as well as high power and hybrid electric systems. This segment's products comprise wire harnesses, terminals and connectors, and junction boxes; and electronic control modules, such as body control modules, smart junction boxes, gateway and wireless control modules, lighting control modules, and audio domain controllers and amplifiers. It also provides electrification products comprising charging systems that include onboard charging modules, cord set charging equipment, and wireless charging systems; battery electronics, which comprise battery disconnect units, cell monitoring supervisory systems, and integrated total battery control modules; and other power management modules, including converter and inverter systems. In addition, this segment offers cybersecurity software; EXO advanced vehicle positioning for automated and autonomous driving applications; roadside modules that communicate real-time traffic information; and cellular protocols for vehicle connectivity, as well as Connexus connectivity products. Further, it provides wireless systems, such as passive entry, remote keyless entry, and dual range/function remote keyless entry systems. The company was founded in 1917 and is headquartered in Southfield, Michigan.

China Automotive Systems Company Profile

China Automotive Systems, Inc., through its subsidiaries, manufactures and sells automotive systems and components in the People's Republic of China. The company produces rack and pinion power steering gears for cars and light duty vehicles; integral power steering gears for heavy-duty vehicles; power steering parts for light duty vehicles; sensor modules; automobile steering systems and columns; and automobile electronic systems and parts. It is also involved in the marketing of automotive parts in North America and Brazil, as well as the provision of after sales, and research and development support services. The company primarily sells its products to the original equipment manufacturing customers. China Automotive Systems, Inc. was founded in 2003 and is headquartered in Wuhan City, the People's Republic of China.

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