Analyzing Otis Worldwide (NYSE:OTIS) and AGCO (NYSE:AGCO)

AGCO (NYSE:AGCO) and Otis Worldwide (NYSE:OTIS) are both industrials companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a summary of current ratings and target prices for AGCO and Otis Worldwide, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AGCO	3	6	5	0	2.14
Otis Worldwide	1	5	4	0	2.30

AGCO presently has a consensus target price of $122.17, suggesting a potential upside of 0.36%. Otis Worldwide has a consensus target price of $92.91, suggesting a potential upside of 35.91%. Given Otis Worldwide’s stronger consensus rating and higher probable upside, analysts clearly believe Otis Worldwide is more favorable than AGCO.

Institutional and Insider Ownership

78.8% of AGCO shares are owned by institutional investors. Comparatively, 88.0% of Otis Worldwide shares are owned by institutional investors. 0.6% of AGCO shares are owned by insiders. Comparatively, 0.1% of Otis Worldwide shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

AGCO has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Otis Worldwide has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.

Earnings and Valuation

This table compares AGCO and Otis Worldwide”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AGCO	$10.35 billion	0.82	$726.50 million	$7.23	16.84
Otis Worldwide	$14.91 billion	1.75	$1.38 billion	$3.89	17.57

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

Profitability

This table compares AGCO and Otis Worldwide’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AGCO	5.15%	10.09%	3.58%
Otis Worldwide	10.17%	-28.50%	14.39%

Dividends

AGCO pays an annual dividend of $1.20 per share and has a dividend yield of 1.0%. Otis Worldwide pays an annual dividend of $1.76 per share and has a dividend yield of 2.6%. AGCO pays out 16.6% of its earnings in the form of a dividend. Otis Worldwide pays out 45.2% 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. AGCO has increased its dividend for 12 consecutive years and Otis Worldwide has increased its dividend for 5 consecutive years.

Summary

Otis Worldwide beats AGCO on 10 of the 17 factors compared between the two stocks.

About AGCO

AGCO Corporation manufactures and distributes agricultural equipment and related replacement parts worldwide. It offers horsepower tractors for row crop production, soil cultivation, planting, land leveling, seeding, and commercial hay operations; utility tractors for small- and medium-sized farms, as well as for dairy, livestock, orchards, and vineyards; and compact tractors for small farms, specialty agricultural industries, landscaping, equestrian, and residential uses. The company also provides grain storage bins and related drying and handling equipment systems; seed-processing systems; swine and poultry feed storage and delivery; ventilation and watering systems; and egg production systems and broiler production equipment. In addition, it offers round and rectangular balers, loader wagons, self-propelled windrowers, forage harvesters, disc mowers, spreaders, rakes, tedders, and mower conditioners for harvesting and packaging vegetative feeds used in the beef cattle, dairy, horse, and renewable fuel industries. Further, the company provides implements, including disc harrows leveling seed beds and mixing chemicals with the soils; heavy tillage to break up soil and mix crop residue into topsoil; field cultivators that prepare smooth seed bed and destroy weeds; drills for small grain seeding; planters and other planting equipment; and loaders. Additionally, it offers combines for harvesting grain crops, such as corn, wheat, soybeans, and rice; and application equipment, such as self-propelled, three- and four-wheeled vehicles, and related equipment for liquid and dry fertilizers and crop protection chemicals, and for after crops emerge from the ground, as well as produces diesel engines, gears, and generating sets. The company markets its products under the Fendt, GSI, Massey Ferguson, Precision Planting, and Valtra brands through a network of independent dealers and distributors. AGCO Corporation was founded in 1990 and is headquartered in Duluth, Georgia.

About Otis Worldwide

Otis Worldwide Corporation engages in manufacturing, installation, and servicing of elevators and escalators in the United States, China, and internationally. The company operates in two segments, New Equipment and Service. The New Equipment segment designs, manufactures, sells, and installs a range of passenger and freight elevators, as well as escalators and moving walkways for residential and commercial buildings, and infrastructure projects. This segment serves real-estate and building developers, and general contractors. It sells its products directly to customers, as well as through agents and distributors. The Service segment performs maintenance and repair services, as well as modernization services to upgrade elevators and escalators. Otis Worldwide Corporation was founded in 1853 and is headquartered in Farmington, Connecticut.