Reviewing Goodyear Tire & Rubber (NASDAQ:GT) and China Automotive Systems (NASDAQ:CAAS)

China Automotive Systems (NASDAQ:CAAS) and Goodyear Tire & Rubber (NASDAQ:GT) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Volatility and Risk

China Automotive Systems has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500. Comparatively, Goodyear Tire & Rubber has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500.

Profitability

This table compares China Automotive Systems and Goodyear Tire & Rubber’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
China Automotive Systems	5.59%	10.58%	5.07%
Goodyear Tire & Rubber	-14.37%	-2.95%	-0.50%

Insider and Institutional Ownership

5.2% of China Automotive Systems shares are held by institutional investors. Comparatively, 84.2% of Goodyear Tire & Rubber shares are held by institutional investors. 64.8% of China Automotive Systems shares are held by insiders. Comparatively, 0.5% of Goodyear Tire & Rubber shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares China Automotive Systems and Goodyear Tire & Rubber”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
China Automotive Systems	$765.74 million	0.20	$42.84 million	$1.42	3.51
Goodyear Tire & Rubber	$18.28 billion	0.10	-$1.72 billion	($8.83)	-0.72

China Automotive Systems has higher earnings, but lower revenue than Goodyear Tire & Rubber. Goodyear Tire & Rubber is trading at a lower price-to-earnings ratio than China Automotive Systems, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for China Automotive Systems and Goodyear Tire & Rubber, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
China Automotive Systems	0	1	0	0	2.00
Goodyear Tire & Rubber	2	3	2	0	2.00

Goodyear Tire & Rubber has a consensus price target of $8.26, suggesting a potential upside of 30.08%. Given Goodyear Tire & Rubber’s higher probable upside, analysts plainly believe Goodyear Tire & Rubber is more favorable than China Automotive Systems.

Summary

China Automotive Systems beats Goodyear Tire & Rubber on 8 of the 13 factors compared between the two stocks.

About China Automotive Systems

China Automotive Systems, Inc., through its subsidiaries, manufactures and sells automotive systems and components in the People's Republic of China, the United States, and internationally. It produces rack and pinion power steering gears for cars and light-duty vehicles; integral power steering gears for heavy-duty vehicles; power steering parts for light duty vehicles; sensor modules; automobile steering systems and columns; and automobile electronics and systems and parts. The company also offers automotive motors and electromechanical integrated systems; polymer materials; and intelligent automotive technology research and development services. In addition, it provides after sales services, and research and development support services; and inspection and testing of automotive products, as well as markets automotive parts in North America. The company primarily sells its products to the original equipment manufacturing customers. China Automotive Systems, Inc. is headquartered in Jingzhou, the People's Republic of China.

About Goodyear Tire & Rubber

Goodyear Tire & Rubber Co. engages in the development, manufacture, distribution, and sale of tires. It operates through the following geographical segments: Americas, Europe, Middle East, and Africa, and Asia Pacific. The Americas segment is involved in the development, manufacture, distribution, and sale of tires and related products and services in North, Central, and South America. The Europe, Middle East, and Africa segment focuses on the development, manufacture, distribution, and sale of tires for automobiles, trucks, buses, aircraft, motorcycles, earthmoving, mining, and industrial equipment throughout Europe, the Middle East, and Africa. The Asia Pacific segment refers to the development, manufacture, distribution, and sales of tires for automobiles, trucks, buses, aircraft, farm, earthmoving, mining, and industrial equipment throughout the Asia Pacific region. The company was founded by Frank A. Seiberling on August 29, 1898 and is headquartered in Akron, OH.