Analyzing Mahindra & Mahindra (OTCMKTS:MAHMF) and Volkswagen (OTCMKTS:VWAGY)

Volkswagen (OTCMKTS:VWAGY) and Mahindra & Mahindra (OTCMKTS:MAHMF) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, risk, valuation, earnings, profitability and institutional ownership.

Dividends

Volkswagen pays an annual dividend of $0.35 per share and has a dividend yield of 4.0%. Mahindra & Mahindra pays an annual dividend of $12.28 per share and has a dividend yield of 34.4%. Volkswagen pays out 28.7% of its earnings in the form of a dividend. Mahindra & Mahindra pays out 16.2% 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. Mahindra & Mahindra is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings for Volkswagen and Mahindra & Mahindra, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Volkswagen	1	1	2	1	2.60
Mahindra & Mahindra	0	0	0	0	0.00

Profitability

This table compares Volkswagen and Mahindra & Mahindra’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Volkswagen	1.68%	2.74%	0.85%
Mahindra & Mahindra	N/A	N/A	N/A

Valuation & Earnings

This table compares Volkswagen and Mahindra & Mahindra”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Volkswagen	$364.13 billion	0.12	$8.29 billion	$1.22	7.22
Mahindra & Mahindra	N/A	N/A	N/A	$75.83	0.47

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

Insider and Institutional Ownership

2.4% of Mahindra & Mahindra shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Volkswagen beats Mahindra & Mahindra on 8 of the 12 factors compared between the two stocks.

About Volkswagen

Volkswagen AG manufactures and sells automobiles in Germany, other European countries, North America, South America, the Asia-Pacific, and internationally. The company operates through four segments: Passenger Cars and Light Commercial Vehicles, Commercial Vehicles, Power Engineering, and Financial Services. The Passenger Cars and Light Commercial Vehicles segment engages in the development of vehicles, engines, and vehicle software; produces and sells passenger cars and light commercial vehicles, and related parts; and offers motorcycles. The Commercial Vehicles segment develops, produces, and sells trucks and buses; and offers parts and related services. The Power Engineering segment offers large-bore diesel engines, turbomachinery, and propulsion components. The Financial Services segment provides dealership and customer financing, leasing, direct banking and insurance, fleet management, and mobility services. It sells its products under the Volkswagen Passenger Cars, koda, SEAT/CUPRA, Volkswagen Commercial Vehicles, Audi, Lamborghini, Bentley, Ducati, Porsche, Scania, MAN, Volkswagen Truck & Bus, Navistar commercial vehicles, and Bugatti brands. The company was founded in 1937 and is headquartered in Wolfsburg, Germany. Volkswagen AG operates as a subsidiary of Porsche Automobil Holding SE.

About Mahindra & Mahindra

Mahindra & Mahindra Limited provides mobility products and farm solutions in India and internationally. The company operates through Automotive, Farm Equipment, Financial Services, Real Estate, Hospitality, and Others segments. It offers passenger and commercial vehicles, trucks, buses, vans, cars, utility vehicles, and electric vehicles; watercrafts; motorcycles, scooters, and mopeds; manufactures, assembles, and maintains various kinds of aircrafts and aircraft components, and aerostructures; offers construction equipment, such as backhoe loaders under the Mahindra EarthMaster brand; and road construction equipment comprising motor graders under the Mahindra RoadMaster brand. It is also involved in the provision of farm equipment, including tractors; and manufacture and distribute the SMART Seeder Mini-MAX in collaboration with Clean Seed Capital Group Ltd., as well as engages in renewable energy business. Further, the company offers financial services comprising retail and other loans, SME finance, housing finance, mutual funds, and life and non-life insurance broking services, as well as vehicle and equipment financing; provides logistics services; power backup solutions, such as diesel and gas generators; and technology services, including business process services, integrated engineering services, infrastructure and cloud services, application development and maintenance services. Additionally, it engages in the sale of timeshare and vacation ownership through its resorts; develops and sells residential properties, and engages in the development, management, and operation of commercial complexes; and processing and trading of steel for automotive, non-automotive, and power industries, as well as offers agriculture products comprising seeds, crop care products, micro-irrigation products, and pumps; and exports grapes. The company was incorporated in 1945 and is based in Mumbai, India.