Federal-Mogul Holdings (NASDAQ: FDML) and Gentherm (NASDAQ:THRM) are both small-cap companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.

Earnings & Valuation

This table compares Federal-Mogul Holdings and Gentherm’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Federal-Mogul Holdings N/A N/A N/A $0.49 20.37
Gentherm $917.60 million 1.41 $76.59 million $1.81 19.53

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

Profitability

This table compares Federal-Mogul Holdings and Gentherm’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federal-Mogul Holdings 0.31% 16.56% 2.17%
Gentherm 6.89% 12.82% 7.68%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Federal-Mogul Holdings and Gentherm, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federal-Mogul Holdings 0 0 0 0 N/A
Gentherm 0 3 5 0 2.63

Gentherm has a consensus target price of $40.43, indicating a potential upside of 14.37%. Given Gentherm’s higher probable upside, analysts plainly believe Gentherm is more favorable than Federal-Mogul Holdings.

Insider and Institutional Ownership

98.5% of Federal-Mogul Holdings shares are owned by institutional investors. Comparatively, 97.9% of Gentherm shares are owned by institutional investors. 82.1% of Federal-Mogul Holdings shares are owned by insiders. Comparatively, 2.3% of Gentherm shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Gentherm beats Federal-Mogul Holdings on 6 of the 9 factors compared between the two stocks.

About Federal-Mogul Holdings

Federal-Mogul Holdings Corp, formerly Federal-Mogul Corporation, is a global supplier of technology and innovation in vehicle and industrial products for fuel economy, emissions reduction and safety systems. The Company serves original equipment manufacturers (OEM) and servicers (OES) (collectively OE) of automotive, light, medium and heavy-duty commercial vehicles, off-road, agricultural, marine, rail, aerospace, power generation and industrial equipment, as well as the worldwide aftermarket. As of December 31, 2012, the Company had OEM products included on more than 300 global vehicle platforms and more than 700 global powertrains used in light, medium and heavy-duty vehicles. The Company offers brands, OE replacement and premium products for all aftermarket customers.

About Gentherm

Gentherm Incorporated (Gentherm) is a global technology company engaged in the design, development, and manufacturing of thermal management technologies. The Company has two segments: Automotive and Industrial. Its products provide solutions for automotive passenger comfort and convenience, battery thermal management, remote power generation, patient temperature management, environmental product testing and other consumer and industrial temperature control needs. Its automotive products can be found on the vehicles of all major automotive manufacturers operating in North America, Europe and Asia. The Automotive segment comprises the results from its global automotive businesses and individual convenience products. The Industrial segment represents the combined results from its remote power generation systems business, patient temperature management systems business, environmental testing equipment and services business, and advanced research and product development division.

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