China Automotive Systems (NASDAQ: CAAS) and Tower International (NYSE:TOWR) are both small-cap auto/tires/trucks companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, risk, valuation and profitability.

Profitability

This table compares China Automotive Systems and Tower International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Automotive Systems 5.43% 8.30% 4.05%
Tower International 3.76% 33.20% 6.20%

Valuation & Earnings

This table compares China Automotive Systems and Tower International’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
China Automotive Systems $481.15 million 0.34 $41.16 million $0.82 6.28
Tower International $1.91 billion 0.23 $185.76 million $3.42 6.39

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

Volatility and Risk

China Automotive Systems has a beta of 2.22, meaning that its share price is 122% more volatile than the S&P 500. Comparatively, Tower International has a beta of 2.59, meaning that its share price is 159% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for China Automotive Systems and Tower International, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Automotive Systems 0 0 1 0 3.00
Tower International 0 2 1 0 2.33

China Automotive Systems currently has a consensus price target of $7.50, suggesting a potential upside of 45.63%. Tower International has a consensus price target of $32.67, suggesting a potential upside of 49.50%. Given Tower International’s higher probable upside, analysts plainly believe Tower International is more favorable than China Automotive Systems.

Institutional and Insider Ownership

5.2% of China Automotive Systems shares are held by institutional investors. Comparatively, 91.4% of Tower International shares are held by institutional investors. 62.2% of China Automotive Systems shares are held by company insiders. Comparatively, 6.2% of Tower International shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Tower International pays an annual dividend of $0.44 per share and has a dividend yield of 2.0%. China Automotive Systems does not pay a dividend. Tower International pays out 12.9% of its earnings in the form of a dividend.

Summary

Tower International beats China Automotive Systems on 9 of the 15 factors compared between the two stocks.

China Automotive Systems Company Profile

China Automotive Systems, Inc., (China Automotive) is a holding company. The Company, through its subsidiary, Great Genesis Holdings Limited (Genesis), owns interests in over eight Sino-joint ventures and over five subsidiaries in the People’s Republic of China (PRC), which manufacture power steering systems and/or related products for various segments of the automobile industry. Genesis also owns interests in a Brazil-based trading company, which engages mainly in the import and sales of automotive parts in Brazil. Henglong USA Corporation (HLUSA), which is a subsidiary of the Company, engages in marketing of automotive parts in North America, and provides after sales service and research and development support. The Company’s geographical segments include the United States, China and other foreign countries. One of its subsidiaries, Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., focuses on power steering parts for light duty vehicles.

Tower International Company Profile

Tower International, Inc. is a global manufacturer of engineered automotive structural metal components and assemblies primarily serving original equipment manufacturers (OEMs). The Company’s product portfolio includes body-structure stampings, frame and other chassis structures, and welded assemblies for small and large cars, crossovers, pickups and sport utility vehicles (SUVs). The Company offers body structures and assemblies, including structural metal components, such as body pillars, roof rails and side sills. The Company also offers Class A surfaces and assemblies, which are components of the exterior skin of the vehicle, such as body sides, hoods, doors, fenders and pickup truck boxes. The Company’s lower vehicle frames and structures include chassis structures. Its products include pickup truck and SUV full frames, automotive engine and rear suspension cradles, floor pan components and cross members that form the basic lower body structure of the vehicle.

Receive News & Ratings for China Automotive Systems Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for China Automotive Systems Inc. and related companies with MarketBeat.com's FREE daily email newsletter.