Head to Head Analysis: Brembo (OTCMKTS:BRBOF) & Knorr-Bremse (OTCMKTS:KNRRY)

Brembo (OTCMKTS:BRBOF) and Knorr-Bremse (OTCMKTS:KNRRY) are both consumer cyclical companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Insider and Institutional Ownership

21.4% of Brembo shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for Brembo and Knorr-Bremse, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brembo	0	1	0	0	2.00
Knorr-Bremse	1	2	5	0	2.50

Dividends

Brembo pays an annual dividend of $0.36 per share and has a dividend yield of 2.8%. Knorr-Bremse pays an annual dividend of $0.33 per share and has a dividend yield of 1.1%. Brembo pays out 19.7% of its earnings in the form of a dividend. Knorr-Bremse pays out 33.3% 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. Brembo is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Brembo and Knorr-Bremse’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brembo	N/A	N/A	N/A
Knorr-Bremse	7.08%	17.17%	6.13%

Valuation and Earnings

This table compares Brembo and Knorr-Bremse”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brembo	N/A	N/A	N/A	$1.84	7.01
Knorr-Bremse	$8.84 billion	2.20	$604.17 million	$0.99	30.49

Knorr-Bremse has higher revenue and earnings than Brembo. Brembo is trading at a lower price-to-earnings ratio than Knorr-Bremse, indicating that it is currently the more affordable of the two stocks.

Summary

Knorr-Bremse beats Brembo on 7 of the 11 factors compared between the two stocks.

About Brembo

Brembo S.p.A., together with its subsidiaries, designs, develops, produces, and sells braking systems and components for cars, motorbikes, and industrial vehicles and machinery. It operates through Discs Systems Motorbikes; and Aftermarket Performance Group segments. The company offers various products for car and commercial vehicle applications, including brake discs, brake calipers, side-wheel modules, and braking systems, as well as integrated engineering services for light commercial and heavy industrial vehicles, motorbikes, and racing competitions. It also provides brake master cylinders, light-alloy wheels, brake hoses, braking systems, pads, drums, brake shoes, drum-brake kits, and hydraulic components. In addition, the company offers braking systems for race cars and motorbikes under the Brembo Racing brand; braking systems and clutches for race cars under the AP Racing brand name; and magnesium and aluminum wheels for racing motorbikes under the Marchesini brand. It operates in Italy, Germany, France, the United Kingdom, other European countries, India, China, Japan, other Asian countries, Argentina, Brazil, the United States, Mexico, Canada, and internationally. Brembo S.p.A. was founded in 1961 and is headquartered in Stezzano, Italy. Brembo S.p.A. is a subsidiary of Nuova FourB S.r.l.

About Knorr-Bremse

Knorr-Bremse AG, together with its subsidiaries, engages in the development, production, marketing, and servicing of braking and other systems for rail and commercial vehicles worldwide. The company operates in two segments, Rail Vehicle Systems and Commercial Vehicle Systems. The Rail Vehicle Systems segment offers braking systems, entrance and HVAC systems, sanitary systems, coupling systems, digital solutions, smart services for optimizing rail traffic, power electrics, rail computing and communication (RCC)/TCMS, signaling systems, stationary and mobile testing equipment, windshield wiper and wash systems, and extensive aftermarket solutions. The Commercial Vehicle Systems segment provides pneumatic braking systems comprising brake control systems, disk brakes, drum brakes, brake cylinders, valves, and pedal units; steering systems; vehicle dynamics solutions, such as anti-lock braking systems and electronic stability programs; driver assistance systems; automated driving and electronic leveling control; energy supply and distribution systems, including compressors and air treatment products; and engine components and transmission control systems, such as vibration dampers, engine air management, transmission control, and gear/clutch actuation products for trucks, buses, trailers, and agricultural machinery. In addition, it offers leasing, holding, logistics, and media and IT services. The company was founded in 1905 and is headquartered in Munich, Germany. Knorr-Bremse AG is a subsidiary of KB Holding GmbH.