Metaldyne Performance Group (NYSE: MPG) and Meritor (NYSE:MTOR) are both cyclical consumer goods & services companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, profitability, analyst recommendations, institutional ownership, earnings, valuation and dividends.

Analyst Ratings

This is a summary of current ratings and recommmendations for Metaldyne Performance Group and Meritor, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Metaldyne Performance Group 0 2 0 0 2.00
Meritor 0 3 5 0 2.63

Metaldyne Performance Group presently has a consensus price target of $17.50, suggesting a potential downside of 20.09%. Meritor has a consensus price target of $25.44, suggesting a potential downside of 3.32%. Given Meritor’s stronger consensus rating and higher probable upside, analysts clearly believe Meritor is more favorable than Metaldyne Performance Group.

Earnings & Valuation

This table compares Metaldyne Performance Group and Meritor’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Metaldyne Performance Group N/A N/A N/A $1.44 15.21
Meritor $3.15 billion 0.74 $255.00 million $6.02 4.37

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

Volatility & Risk

Metaldyne Performance Group has a beta of 2.07, suggesting that its share price is 107% more volatile than the S&P 500. Comparatively, Meritor has a beta of 2.3, suggesting that its share price is 130% more volatile than the S&P 500.

Profitability

This table compares Metaldyne Performance Group and Meritor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Metaldyne Performance Group 2.60% 9.80% 2.11%
Meritor 17.03% -106.67% 5.68%

Institutional and Insider Ownership

18.6% of Metaldyne Performance Group shares are owned by institutional investors. Comparatively, 93.2% of Meritor shares are owned by institutional investors. 5.1% of Metaldyne Performance Group shares are owned by company insiders. Comparatively, 2.9% of Meritor shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Metaldyne Performance Group pays an annual dividend of $0.37 per share and has a dividend yield of 1.7%. Meritor does not pay a dividend. Metaldyne Performance Group pays out 25.7% of its earnings in the form of a dividend.

Summary

Meritor beats Metaldyne Performance Group on 10 of the 13 factors compared between the two stocks.

About Metaldyne Performance Group

Metaldyne Performance Group Inc. provides components for use in engine, transmission and driveline (Powertrain) and chassis, suspension, steering and brake component (Safety-Critical) Platforms for the global light, commercial and industrial vehicle markets. The Company produces these components using complex metal-forming manufacturing technologies and processes for a customer base of vehicle original equipment manufacturers and Tier I suppliers. The Company operates through three segments: HHI, Metaldyne and Grede. Its metal-forming manufacturing technologies and processes include Aluminum Die Casting, Forging, Iron Casting and Powder Metal Forming, as well as value-added manufacturing processes, such as Advanced Machining and Assembly. These technologies and processes are used to create a range of customized Powertrain and Safety-Critical components that address requirements for power density, power generation, power/torque transfer, strength and noise, vibration and harshness.

About Meritor

Meritor, Inc. is a supplier of a range of integrated systems, modules and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation and industrial sectors. The Company’s segments include Commercial Truck & Industrial and Aftermarket & Trailer. The Commercial Truck & Industrial segment supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems, for medium- and heavy-duty trucks, off-highway, military, construction, bus and coach, fire and emergency and other applications in North America, South America, Europe and Asia Pacific. The Commercial Truck & Industrial segment also includes the Company’s aftermarket businesses in Asia Pacific and South America. The Aftermarket & Trailer segment supplies axles, brakes, drivelines, suspension parts and other replacement and remanufactured parts to commercial vehicle aftermarket customers in North America and Europe.

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