Head-To-Head Survey: Lear (NYSE:LEA) vs. Knorr-Bremse (OTCMKTS:KNRRY)

Knorr-Bremse (OTCMKTS:KNRRY) and Lear (NYSE:LEA) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, earnings, valuation, dividends and profitability.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Knorr-Bremse and Lear, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Knorr-Bremse	2	1	5	0	2.38
Lear	0	12	3	1	2.31

Lear has a consensus target price of $143.25, indicating a potential upside of 27.94%. Given Lear’s higher probable upside, analysts plainly believe Lear is more favorable than Knorr-Bremse.

Insider & Institutional Ownership

97.0% of Lear shares are owned by institutional investors. 1.0% of Lear shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Knorr-Bremse and Lear”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Knorr-Bremse	$8.84 billion	1.96	$604.17 million	$1.11	24.19
Lear	$23.79 billion	0.23	$436.80 million	$11.45	9.78

Knorr-Bremse has higher earnings, but lower revenue than Lear. Lear is trading at a lower price-to-earnings ratio than Knorr-Bremse, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Knorr-Bremse and Lear’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Knorr-Bremse	7.72%	19.26%	6.90%
Lear	2.46%	14.92%	5.10%

Dividends

Knorr-Bremse pays an annual dividend of $0.33 per share and has a dividend yield of 1.2%. Lear pays an annual dividend of $3.08 per share and has a dividend yield of 2.8%. Knorr-Bremse pays out 29.7% of its earnings in the form of a dividend. Lear pays out 26.9% 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. Lear is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Knorr-Bremse has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500. Comparatively, Lear has a beta of 1.28, suggesting that its share price is 28% more volatile than the S&P 500.

Summary

Lear beats Knorr-Bremse on 9 of the 17 factors compared between the two stocks.

About Knorr-Bremse

Knorr-Bremse AG, together with its subsidiaries, engages in the development, production, marketing, and servicing of braking and other systems for rail and commercial vehicles worldwide. The company operates in two segments, Rail Vehicle Systems and Commercial Vehicle Systems. The Rail Vehicle Systems segment offers braking systems, entrance and HVAC systems, sanitary systems, coupling systems, digital solutions, smart services for optimizing rail traffic, power electrics, rail computing and communication (RCC)/TCMS, signaling systems, stationary and mobile testing equipment, windshield wiper and wash systems, and extensive aftermarket solutions. The Commercial Vehicle Systems segment provides pneumatic braking systems comprising brake control systems, disk brakes, drum brakes, brake cylinders, valves, and pedal units; steering systems; vehicle dynamics solutions, such as anti-lock braking systems and electronic stability programs; driver assistance systems; automated driving and electronic leveling control; energy supply and distribution systems, including compressors and air treatment products; and engine components and transmission control systems, such as vibration dampers, engine air management, transmission control, and gear/clutch actuation products for trucks, buses, trailers, and agricultural machinery. In addition, it offers leasing, holding, logistics, and media and IT services. The company was founded in 1905 and is headquartered in Munich, Germany. Knorr-Bremse AG is a subsidiary of KB Holding GmbH.

About Lear

Lear Corporation designs, develops, engineers, manufactures, assembles, and supplies automotive seating, and electrical distribution systems and related components for automotive original equipment manufacturers in North America, Europe, Africa, Asia, and South America. Its Seating segment offers seat systems, seat subsystems, keyseat components, seat trim covers, seat mechanisms, seat foams, and headrests, as well as surface materials, such as leather and fabric for automobiles and light trucks, compact cars, pick-up trucks, and sport utility vehicles. The company’s E-Systems segment provides electrical distribution and connection systems that route electrical signals and networks; and manage electrical power within the vehicle for various powertrains. This segment’s products comprise wire harnesses, terminals and connectors, engineered components, and junction boxes; electronic system products, including body domain control modules, smart and passive junction boxes, gateway and communication modules, integrated power modules, and high voltage switching and power control systems. It also offers software and connected services comprising Xevo Market, an in-vehicle commerce and service platform; and software and services for the cloud, vehicles, and mobile devices. In addition, this segment provides cybersecurity software; advanced vehicle positioning for automated and autonomous driving applications; and short-range communication and cellular protocols for vehicle connectivity. It offers its products and services under the XEVO, GUILFORD, EAGLE OTTAWA, ConfigurE+, INTUTM, LEAR CONNEXUSTM, EXO, JOURNEYWARE, ProTec, SMART JUNCTION BOX, STRUCSURE, AVENTINO, and TeXstyle brands. Lear Corporation was founded in 1917 and is headquartered in Southfield, Michigan.