Eastern (NASDAQ:EML – Get Free Report) and Highway (NASDAQ:HIHO – Get Free Report) are both small-cap industrials companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.
Dividends
Eastern pays an annual dividend of $0.44 per share and has a dividend yield of 1.8%. Highway pays an annual dividend of $0.05 per share and has a dividend yield of 5.6%. Eastern pays out 32.8% of its earnings in the form of a dividend. Highway pays out -15.6% 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.
Valuation & Earnings
This table compares Eastern and Highway”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Eastern | $248.97 million | 0.59 | $7.13 million | $1.34 | 18.27 |
| Highway | $4.80 million | 0.87 | -$1.52 million | ($0.32) | -2.81 |
Eastern has higher revenue and earnings than Highway. Highway is trading at a lower price-to-earnings ratio than Eastern, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
77.0% of Eastern shares are owned by institutional investors. Comparatively, 13.2% of Highway shares are owned by institutional investors. 18.4% of Eastern shares are owned by company insiders. Comparatively, 32.1% of Highway shares are owned by company 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.
Analyst Ratings
This is a summary of recent recommendations and price targets for Eastern and Highway, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Eastern | 0 | 2 | 0 | 0 | 2.00 |
| Highway | 1 | 0 | 0 | 0 | 1.00 |
Risk and Volatility
Eastern has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Highway has a beta of 0.48, suggesting that its share price is 52% less volatile than the S&P 500.
Profitability
This table compares Eastern and Highway’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Eastern | 3.44% | 3.38% | 1.89% |
| Highway | -28.08% | -25.93% | -15.72% |
Summary
Eastern beats Highway on 10 of the 14 factors compared between the two stocks.
About Eastern
The Eastern Company designs, manufactures, and sells engineered solutions to industrial markets in the United States and internationally. The company offers turnkey returnable packaging solutions, which are used in the assembly processes of vehicles, aircraft, and durable goods, as well as in production processes of plastic packaging products, packaged consumer goods, and pharmaceuticals; designs and manufactures blow mold tools and injection blow mold tooling products, and 2-step stretch blow molds and related components for the stretch blow molding industry; and supplies blow molds and change parts to the food, beverage, healthcare, and chemical industries. It also provides rotary latches, compression latches, draw latches, hinges, camlocks, key switches, padlocks, and handles; and development and program management services for custom electromechanical and mechanical systems for original equipment manufacturers (OEMs) and customer applications. In addition, the company designs and manufactures proprietary vision technology for OEMs and aftermarket applications, as well as offers aftermarket components to the heavy- and medium-duty truck, motorhome, and bus markets. The Eastern Company was founded in 1858 and is based in Shelton, Connecticut.
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.
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