Magna International (NYSE: MGA) and Tenneco (NYSE:TEN) are both mid-cap auto/tires/trucks companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitabiliy, dividends, earnings, risk, valuation, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of current ratings and price targets for Magna International and Tenneco, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Magna International 1 2 7 1 2.73
Tenneco 1 4 4 0 2.33

Magna International presently has a consensus price target of $51.75, indicating a potential upside of 8.70%. Tenneco has a consensus price target of $67.25, indicating a potential upside of 16.23%. Given Tenneco’s higher possible upside, analysts clearly believe Tenneco is more favorable than Magna International.

Profitability

This table compares Magna International and Tenneco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Magna International 5.76% 20.58% 9.27%
Tenneco 4.21% 55.31% 8.22%

Dividends

Magna International pays an annual dividend of $1.10 per share and has a dividend yield of 2.3%. Tenneco pays an annual dividend of $1.00 per share and has a dividend yield of 1.7%. Magna International pays out 20.1% of its earnings in the form of a dividend. Tenneco pays out 15.2% 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. Tenneco has increased its dividend for 5 consecutive years.

Risk & Volatility

Magna International has a beta of 1.44, indicating that its stock price is 44% more volatile than the S&P 500. Comparatively, Tenneco has a beta of 1.81, indicating that its stock price is 81% more volatile than the S&P 500.

Institutional & Insider Ownership

61.4% of Magna International shares are owned by institutional investors. Comparatively, 96.7% of Tenneco shares are owned by institutional investors. 2.7% of Tenneco shares are owned 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 Magna International and Tenneco’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Magna International $36.92 billion 0.49 $4.00 billion $5.47 8.70
Tenneco $8.76 billion 0.36 $768.00 million $6.59 8.78

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

Magna International Company Profile

Magna International Inc. (Magna) is a global automotive supplier. The Company’s segments are North America, Europe, Asia, Rest of World, and Corporate and Other. The Company’s product capabilities include producing body, chassis, exterior, seating, powertrain, electronic, active driver assistance, vision, closure, and roof systems and modules, as well as vehicle engineering and contract manufacturing. The Company has over 320 manufacturing operations and approximately 100 product development, engineering and sales centers in over 30 countries. It provides a range of body, chassis and engineering solutions to its original equipment manufacturer (OEM) customers. It has capabilities in powertrain design, development, testing and manufacturing. It offers bumper fascia systems, exterior trim and modular systems. It offers exterior and interior mirror systems. It offers sealing, trim, engineered glass and module systems. It offers softtops, retractable hardtops, modular tops and hardtops.

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.

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