Analyzing Highway (NASDAQ:HIHO) and Enerpac Tool Group (NYSE:EPAC)

Enerpac Tool Group (NYSE:EPAC) and Highway (NASDAQ:HIHO) are both small-cap industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, profitability, dividends, institutional ownership, valuation, analyst recommendations and earnings.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Enerpac Tool Group and Highway, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Enerpac Tool Group	0	3	1	0	2.25
Highway	1	0	0	0	1.00

Enerpac Tool Group presently has a consensus target price of $50.00, suggesting a potential upside of 41.44%. Given Enerpac Tool Group’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Enerpac Tool Group is more favorable than Highway.

Volatility and Risk

Enerpac Tool Group has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Highway has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500.

Valuation and Earnings

This table compares Enerpac Tool Group and Highway”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Enerpac Tool Group	$634.08 million	2.85	$92.75 million	$1.77	19.97
Highway	$5.26 million	0.79	-$1.52 million	($0.32)	-2.81

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

Dividends

Enerpac Tool Group pays an annual dividend of $0.04 per share and has a dividend yield of 0.1%. Highway pays an annual dividend of $0.05 per share and has a dividend yield of 5.6%. Enerpac Tool Group pays out 2.3% of its earnings in the form of a dividend. Highway pays out -15.6% 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. Highway is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Enerpac Tool Group and Highway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Enerpac Tool Group	14.72%	23.21%	12.10%
Highway	-28.08%	-25.93%	-15.72%

Institutional and Insider Ownership

97.7% of Enerpac Tool Group shares are owned by institutional investors. Comparatively, 13.2% of Highway shares are owned by institutional investors. 1.5% of Enerpac Tool Group shares are owned by company insiders. Comparatively, 32.1% of Highway shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Enerpac Tool Group beats Highway on 13 of the 16 factors compared between the two stocks.

About Enerpac Tool Group

Enerpac Tool Group Corp. manufactures and sells a range of industrial products and solutions in the United States, the United Kingdom, Germany, Australia, Canada, China, Saudi Arabia, Brazil, France, and internationally. It operates through Industrial Tools & Services and Other segments. The Industrial Tools & Services segment designs, manufactures, and distributes branded hydraulic and mechanical tools; and provides services and tool rentals to the infrastructure, industrial maintenance, repair and operations, oil and gas, mining, alternative and renewable energy, civil construction, and other markets. It also offers branded tools and engineered heavy lifting technology solutions, and hydraulic torque wrenches; maintenance and manpower services; high-force hydraulic and mechanical tools, including cylinders, pumps, valves, and specialty tools; and bolt tensioners and other miscellaneous products. This segment markets its branded tools and services primarily under the Enerpac, Hydratight, Larzep, and Simplex brands. The Other segment designs and manufactures synthetic ropes and biomedical textiles. The company was formerly known as Actuant Corporation and changed its name to Enerpac Tool Group Corp. in January 2020. Enerpac Tool Group Corp. was incorporated in 1910 and is headquartered in Menomonee Falls, Wisconsin.

About Highway

Highway Holdings Limited, together with its subsidiaries, manufactures and supplies metal, plastic, electric, and electronic components, subassemblies, and finished products for original equipment manufacturers (OEMs) and contract manufacturers. It operates through two segments, Metal Stamping and Mechanical OEM; and Electric OEM. The company also trades in plastic injection products; and manufactures and assembles automation equipment. Its products are used in the manufacture of products, such as photocopiers, laser printers, print cartridges, electrical connectors, electrical circuits, vacuum cleaners, LED power supplies, stepping motors, pumps for dishwashers, and other washing machine components. In addition, the company assists customers in the design and development of the tooling used in the metal and plastic manufacturing process, as well as provides an array of other manufacturing and engineering services, including metal stamping, screen printing, plastic injection molding, pad printing, and electronic assembly of printed circuit boards. It operates in Hong Kong and China, Europe, North America, and other Asian countries. Highway Holdings Limited was incorporated in 1990 and is headquartered in Sheung Shui, Hong Kong.