Head-To-Head Review: Komatsu (OTCMKTS:KMTUY) & Highway (NASDAQ:HIHO)

Highway (NASDAQ:HIHO) and Komatsu (OTCMKTS:KMTUY) are both industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, earnings, profitability, institutional ownership and analyst recommendations.

Dividends

Highway pays an annual dividend of $0.05 per share and has a dividend yield of 5.6%. Komatsu pays an annual dividend of $0.89 per share and has a dividend yield of 1.9%. Highway pays out -15.6% of its earnings in the form of a dividend. Komatsu pays out 32.6% 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.

Analyst Ratings

This is a summary of current ratings for Highway and Komatsu, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Highway	1	0	0	0	1.00
Komatsu	0	1	0	0	2.00

Risk and Volatility

Highway has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500. Comparatively, Komatsu has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500.

Profitability

This table compares Highway and Komatsu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Highway	-28.08%	-25.93%	-15.72%
Komatsu	8.93%	10.51%	5.93%

Earnings and Valuation

This table compares Highway and Komatsu”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Highway	$4.80 million	0.87	-$1.52 million	($0.32)	-2.81
Komatsu	$27.45 billion	1.59	$2.48 billion	$2.73	17.16

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

Institutional and Insider Ownership

13.2% of Highway shares are owned by institutional investors. Comparatively, 0.2% of Komatsu shares are owned by institutional investors. 32.1% of Highway shares are owned by company insiders. Comparatively, 2.9% of Komatsu shares are owned by company 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.

Summary

Komatsu beats Highway on 10 of the 14 factors compared between the two stocks.

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.

About Komatsu

Komatsu Ltd. manufactures and sells construction, mining, and utility equipment in Japan, the Americas, Europe, China, Rest of Asia, Oceania, the Middle East, Africa, and CIS countries. It operates through three segments: Construction, Mining and Utility Equipment; Retail Finance; and Industrial Machinery and Others. The company offers construction and mining equipment, including excavators, wheel loaders, bulldozers, motor graders, dump truck, rope and hybrid shovels, electric wheel loaders, continuous miners, and jumbo drills. It also provides forestry equipment, including harvesters, forwarders, feller bunchers, excavators, mini excavators, and forklifts; demolition, waste, and recycling equipment, such as mobile crushers, hydraulic excavators, wheel loaders, and mini shovels; material handling equipment; and tunnel-boring machines, pipe layers, towing tractors, and engines. In addition, the company offers industrial machinery, including presses, sheet-metal machinery, 3D laser cutting machine, transfer machines, battery manufacturing equipment, wire saws, thermos modules, thermoelectric generation module, and temperature control products; quarry equipment; agricultural and livestock equipment; EH sensor device; iron and steel casting products; and logistics equipment. Further, the company provides retail financing; construction machinery rental services; remanufactured products; other support services; transportation, warehousing, packing, and other services; and purchases and sells used equipment. Komatsu Ltd. was founded in 1884 and is headquartered in Tokyo, Japan.