Head-To-Head Review: Highway (NASDAQ:HIHO) versus CNH Industrial (NYSE:CNH)

Highway (NASDAQ:HIHO) and CNH Industrial (NYSE:CNH) are both industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, risk, profitability, earnings and analyst recommendations.

Dividends

Highway pays an annual dividend of $0.05 per share and has a dividend yield of 5.6%. CNH Industrial pays an annual dividend of $0.10 per share and has a dividend yield of 0.8%. Highway pays out -15.6% of its earnings in the form of a dividend. CNH Industrial pays out 40.0% 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. Highway is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Highway and CNH Industrial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Highway	-28.08%	-25.93%	-15.72%
CNH Industrial	1.71%	6.78%	1.24%

Volatility & Risk

Highway has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500. Comparatively, CNH Industrial has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Insider & Institutional Ownership

13.2% of Highway shares are owned by institutional investors. Comparatively, 59.9% of CNH Industrial shares are owned by institutional investors. 32.1% of Highway shares are owned by company insiders. Comparatively, 0.2% of CNH Industrial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Highway and CNH Industrial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Highway	$4.80 million	0.86	-$1.52 million	($0.32)	-2.79
CNH Industrial	$18.09 billion	0.85	$510.00 million	$0.25	49.81

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

Analyst Ratings

This is a breakdown of recent recommendations for Highway and CNH Industrial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Highway	1	0	0	0	1.00
CNH Industrial	1	6	8	0	2.47

CNH Industrial has a consensus target price of $13.23, indicating a potential upside of 6.27%. Given CNH Industrial’s stronger consensus rating and higher possible upside, analysts clearly believe CNH Industrial is more favorable than Highway.

Summary

CNH Industrial beats Highway on 12 of the 16 factors compared between the two stocks.

About Highway

Highway Holdings Limited, together with its subsidiaries, manufactures and supplies metal, plastic, electric, and electronic components, subassemblies, and finished products for original equipment manufacturers (OEMs) and contract manufacturers. It operates through two segments, Metal Stamping and Mechanical OEM; and Electric OEM. The company also trades in plastic injection products; and manufactures and assembles automation equipment. Its products are used in the manufacture of products, such as photocopiers, laser printers, print cartridges, electrical connectors, electrical circuits, vacuum cleaners, LED power supplies, stepping motors, pumps for dishwashers, and other washing machine components. In addition, the company assists customers in the design and development of the tooling used in the metal and plastic manufacturing process, as well as provides an array of other manufacturing and engineering services, including metal stamping, screen printing, plastic injection molding, pad printing, and electronic assembly of printed circuit boards. It operates in Hong Kong and China, Europe, North America, and other Asian countries. Highway Holdings Limited was incorporated in 1990 and is headquartered in Sheung Shui, Hong Kong.

About CNH Industrial

CNH Industrial NV is an equipment and services company, which develops, manufactures and sells specialized machines and services for the farming and construction industries, and supplies replacement parts and accessories. It operates through the following operating segments: Agriculture, Construction, and Financial Services. The Agriculture segment designs, manufactures, and distributes a full line of farm machinery and implements, including two-wheel and four-wheel drive tractors, crawler tractors, combines, grape and sugar cane harvesters, hay and forage equipment, planting and seeding equipment, soil preparation and cultivation implements and material handling equipment. The Construction segment comprises of a full line of construction equipment including excavators, crawler dozers, graders, wheel loaders, backhoe loaders, skid steer loaders, and compact track loaders. The Financial Services segment offers retail note and lease financing to end-use customers for the purchase of new and used agricultural and construction equipment and components. The company was founded in 1866 and is headquartered in London, the United Kingdom.