Contrasting Tenneco (TEN) & Federal-Mogul Holdings (FDML)

Tenneco (NYSE: TEN) and Federal-Mogul Holdings (NASDAQ:FDML) are both auto/tires/trucks companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Insider and Institutional Ownership

97.8% of Tenneco shares are held by institutional investors. Comparatively, 98.5% of Federal-Mogul Holdings shares are held by institutional investors. 2.7% of Tenneco shares are held by insiders. Comparatively, 82.1% of Federal-Mogul Holdings shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Tenneco pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. Federal-Mogul Holdings does not pay a dividend. Tenneco pays out 30.2% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current recommendations for Tenneco and Federal-Mogul Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tenneco 1 5 5 0 2.36
Federal-Mogul Holdings 0 0 0 0 N/A

Tenneco presently has a consensus price target of $67.70, suggesting a potential upside of 21.50%. Given Tenneco’s higher possible upside, equities research analysts plainly believe Tenneco is more favorable than Federal-Mogul Holdings.

Profitability

This table compares Tenneco and Federal-Mogul Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tenneco 1.97% 54.13% 7.77%
Federal-Mogul Holdings 0.31% 16.56% 2.17%

Valuation and Earnings

This table compares Tenneco and Federal-Mogul Holdings’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Tenneco $8.60 billion 0.33 $363.00 million $3.31 16.83
Federal-Mogul Holdings N/A N/A N/A $0.49 20.37

Tenneco has higher revenue and earnings than Federal-Mogul Holdings. Tenneco is trading at a lower price-to-earnings ratio than Federal-Mogul Holdings, indicating that it is currently the more affordable of the two stocks.

Summary

Tenneco beats Federal-Mogul Holdings on 8 of the 11 factors compared between the two stocks.

Tenneco Company Profile

Tenneco Inc. is a producer of clean air and ride performance products and systems for light vehicle, commercial truck, off-highway and other vehicle applications. The Company designs, manufactures and distributes highly engineered products for both original equipment vehicle manufacturers (OEMs) and the repair and replacement markets, or aftermarket, across the world. The Company operates through six segments: North America Clean Air; North America Ride Performance; Europe, South America and India Clean Air; Europe, South America and India Ride Performance; Asia Pacific Clean Air, and Asia Pacific Ride Performance. The Company serves both original equipment (OE) vehicle designers and manufacturers and the repair and replacement markets, or aftermarket, globally through brands, including Monroe, Rancho, Clevite Elastomers, Axios, Kinetic and Fric-Rot ride performance products and Walker, XNOx, Fonos, DynoMax and Thrush clean air products.

Federal-Mogul Holdings Company Profile

Federal-Mogul Holdings Corp, formerly Federal-Mogul Corporation, is a global supplier of technology and innovation in vehicle and industrial products for fuel economy, emissions reduction and safety systems. The Company serves original equipment manufacturers (OEM) and servicers (OES) (collectively OE) of automotive, light, medium and heavy-duty commercial vehicles, off-road, agricultural, marine, rail, aerospace, power generation and industrial equipment, as well as the worldwide aftermarket. As of December 31, 2012, the Company had OEM products included on more than 300 global vehicle platforms and more than 700 global powertrains used in light, medium and heavy-duty vehicles. The Company offers brands, OE replacement and premium products for all aftermarket customers.

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