PACCAR (NASDAQ:PCAR) and Westinghouse Air Brake Technologies (NYSE:WAB) are both large-cap auto/tires/trucks companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, institutional ownership and analyst recommendations.
Dividends
PACCAR pays an annual dividend of $1.28 per share and has a dividend yield of 1.3%. Westinghouse Air Brake Technologies pays an annual dividend of $0.48 per share and has a dividend yield of 0.6%. PACCAR pays out 18.6% of its earnings in the form of a dividend. Westinghouse Air Brake Technologies pays out 11.5% 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. PACCAR has increased its dividend for 1 consecutive years and Westinghouse Air Brake Technologies has increased its dividend for 1 consecutive years.
Risk & Volatility
PACCAR has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Westinghouse Air Brake Technologies has a beta of 1.53, suggesting that its stock price is 53% more volatile than the S&P 500.
Institutional and Insider Ownership
61.8% of PACCAR shares are owned by institutional investors. Comparatively, 88.1% of Westinghouse Air Brake Technologies shares are owned by institutional investors. 2.2% of PACCAR shares are owned by insiders. Comparatively, 5.4% of Westinghouse Air Brake Technologies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of recent ratings for PACCAR and Westinghouse Air Brake Technologies, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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PACCAR | 2 | 9 | 3 | 1 | 2.20 |
Westinghouse Air Brake Technologies | 0 | 2 | 5 | 0 | 2.71 |
PACCAR currently has a consensus target price of $96.00, indicating a potential upside of 1.14%. Westinghouse Air Brake Technologies has a consensus target price of $83.3333, indicating a potential upside of 3.38%. Given Westinghouse Air Brake Technologies' stronger consensus rating and higher possible upside, analysts plainly believe Westinghouse Air Brake Technologies is more favorable than PACCAR.
Profitability
This table compares PACCAR and Westinghouse Air Brake Technologies' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
PACCAR | 7.39% | 14.49% | 5.21% |
Westinghouse Air Brake Technologies | 5.29% | 7.60% | 3.99% |
Earnings and Valuation
This table compares PACCAR and Westinghouse Air Brake Technologies' revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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PACCAR | $25.60 billion | 1.29 | $2.39 billion | $6.87 | 13.82 |
Westinghouse Air Brake Technologies | $8.20 billion | 1.86 | $326.70 million | $4.17 | 19.33 |
PACCAR has higher revenue and earnings than Westinghouse Air Brake Technologies. PACCAR is trading at a lower price-to-earnings ratio than Westinghouse Air Brake Technologies, indicating that it is currently the more affordable of the two stocks.
Summary
Westinghouse Air Brake Technologies beats PACCAR on 9 of the 17 factors compared between the two stocks.