Head-To-Head Comparison: A. O. Smith (AOS) & Hollysys Automation Technologies (HOLI)

Hollysys Automation Technologies (NASDAQ: HOLI) and A. O. Smith (NYSE:AOS) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares Hollysys Automation Technologies and A. O. Smith’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hollysys Automation Technologies 18.89% 12.72% 8.71%
A. O. Smith 9.89% 23.30% 12.38%

Valuation and Earnings

This table compares Hollysys Automation Technologies and A. O. Smith’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hollysys Automation Technologies $431.94 million 3.52 $68.94 million $1.55 16.27
A. O. Smith $3.00 billion 3.68 $296.50 million $1.70 37.68

A. O. Smith has higher revenue and earnings than Hollysys Automation Technologies. Hollysys Automation Technologies is trading at a lower price-to-earnings ratio than A. O. Smith, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

68.8% of Hollysys Automation Technologies shares are owned by institutional investors. Comparatively, 75.0% of A. O. Smith shares are owned by institutional investors. 1.3% of A. O. Smith shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Hollysys Automation Technologies has a beta of 1.61, indicating that its stock price is 61% more volatile than the S&P 500. Comparatively, A. O. Smith has a beta of 1.55, indicating that its stock price is 55% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Hollysys Automation Technologies and A. O. Smith, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hollysys Automation Technologies 1 2 1 0 2.00
A. O. Smith 0 3 4 0 2.57

Hollysys Automation Technologies presently has a consensus target price of $20.25, suggesting a potential downside of 19.70%. A. O. Smith has a consensus target price of $66.40, suggesting a potential upside of 3.65%. Given A. O. Smith’s stronger consensus rating and higher probable upside, analysts clearly believe A. O. Smith is more favorable than Hollysys Automation Technologies.

Dividends

Hollysys Automation Technologies pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. A. O. Smith pays an annual dividend of $0.72 per share and has a dividend yield of 1.1%. Hollysys Automation Technologies pays out 7.7% of its earnings in the form of a dividend. A. O. Smith pays out 42.4% 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. A. O. Smith has increased its dividend for 12 consecutive years. A. O. Smith is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

A. O. Smith beats Hollysys Automation Technologies on 14 of the 17 factors compared between the two stocks.

Hollysys Automation Technologies Company Profile

Hollysys Automation Technologies Ltd. is a provider of automation and control technologies, and products. The Company’s segments include Industrial Automation (IA), Rail Transportation (rail), Mechanical and Electrical (M&E), and Miscellaneous. Its technologies are applied through its industrial automation solution suite, including the Distributed Control Systems, Programmable Logic Controller, Real-time Management Information System, HolliAS Asset Management System, Operator Training System, Batch Application Package, Advanced Process Control Package (HolliAS APC Suite), Safety Instrumentation System (SIS), railway signaling system of Train Control Center, Automatic Train Protection, Subway Supervisory and Control platform, nuclear power non-safety automation and control system HolliAs-NMS DCS and other products. It serves customers in the industrial, railway, subway, nuclear power, and mechanical and electronic industries in China, Southeast Asia, India, Europe and the Middle East.

A. O. Smith Company Profile

A. O. Smith Corporation operates through two segments: North America and Rest of World. The Company’s Rest of World segment primarily consists of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas, gas tankless and electric water heaters, as well as water treatment products. Both segments primarily manufacture and market in their respective regions of the world. Its North America segment manufactures and globally markets specialty commercial water heating equipment, condensing and non-condensing boilers and water systems tanks. It also manufactures and markets in-home air purification products in China. It serves residential and commercial end markets in North America with a range of products, which include water heaters, boilers and other. It supplies water heaters to the residential market in China with a broad product offering, including electric, gas, gas tankless, heat pump and solar units, as well as combi boilers.

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