Dongfeng Motor Group (OTCMKTS:DNFGY) and Tower International (NYSE:TOWR) are both auto/tires/trucks companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, analyst recommendations, earnings, valuation and risk.

Insider and Institutional Ownership

0.1% of Dongfeng Motor Group shares are held by institutional investors. Comparatively, 91.3% of Tower International shares are held by institutional investors. 6.2% of Tower International shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Dongfeng Motor Group and Tower International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dongfeng Motor Group N/A N/A N/A
Tower International 2.68% 29.06% 6.78%

Earnings & Valuation

This table compares Dongfeng Motor Group and Tower International’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dongfeng Motor Group $18.50 billion 0.14 $2.08 billion $12.08 3.66
Tower International $1.99 billion 0.27 $47.62 million $3.76 6.88

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

Dividends

Dongfeng Motor Group pays an annual dividend of $1.22 per share and has a dividend yield of 2.8%. Tower International pays an annual dividend of $0.52 per share and has a dividend yield of 2.0%. Dongfeng Motor Group pays out 10.1% of its earnings in the form of a dividend. Tower International pays out 13.8% 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. Tower International has increased its dividend for 2 consecutive years. Dongfeng Motor Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Dongfeng Motor Group has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500. Comparatively, Tower International has a beta of 2.09, indicating that its stock price is 109% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Dongfeng Motor Group and Tower International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dongfeng Motor Group 0 0 0 0 N/A
Tower International 0 2 1 0 2.33

Tower International has a consensus price target of $31.67, indicating a potential upside of 22.36%. Given Tower International’s higher probable upside, analysts clearly believe Tower International is more favorable than Dongfeng Motor Group.

Summary

Tower International beats Dongfeng Motor Group on 10 of the 15 factors compared between the two stocks.

About Dongfeng Motor Group

Dongfeng Motor Group Company Limited manufactures and sells commercial vehicles, passenger vehicles, and auto engines and parts in the People's Republic of China. The company operates through four segments: Commercial Vehicles, Passenger Vehicles, Financing Service, and Corporate and Others. It provides commercial vehicles, including trucks and buses; passenger vehicles comprising basic passenger cars, MPVs, and SUVs; and electric vehicles, off-road vehicles, and special commercial vehicles. The company also engages in other automotive-related businesses, including the manufacture of vehicle manufacturing equipment; import/export businesses; and finance, insurance agency, and used car businesses. In addition, it is involved in the marketing and sale of automobiles; and key assembly other automotive-related businesses. The company was founded in 1969 and is based in Wuhan, the People's Republic of China. Dongfeng Motor Group Company Limited is a subsidiary of Dongfeng Motor Corporation.

About Tower International

Tower International, Inc. manufactures and sells engineered automotive structural metal components and assemblies primarily for original equipment manufacturers. It operates in two segments, North America and Europe. The company provides body structures and assemblies, including structural metal components, which comprise body pillars, roof rails, and side sills; and Class A surfaces and assemblies that consist of body sides, hoods, doors, fenders, and pickup truck boxes. It also offers lower vehicle frames and structures, such as pickup truck and sport utility vehicle (SUV) full frames, automotive engine and rear suspension cradles, floor pan components, and cross members. In addition, the company offers complex body-in-white assemblies comprising various components and sub-assemblies. Its products have applications in small and large cars, crossovers, pickups, and SUVs. The company was formerly known as Tower Automotive, LLC and changed its name to Tower International, Inc. in October 2010. Tower International, Inc. was founded in 1993 and is headquartered in Livonia, Michigan.

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