Critical Review: Hollysys Automation Technologies (HOLI) versus MTS Systems (MTSC)
Hollysys Automation Technologies (NASDAQ: HOLI) and MTS Systems (NASDAQ:MTSC) are both small-cap industrial products companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.
Risk and Volatility
Hollysys Automation Technologies has a beta of 1.61, meaning that its share price is 61% more volatile than the S&P 500. Comparatively, MTS Systems has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Hollysys Automation Technologies and MTS Systems, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Hollysys Automation Technologies||1||1||2||0||2.25|
Hollysys Automation Technologies currently has a consensus price target of $19.65, suggesting a potential downside of 20.11%. MTS Systems has a consensus price target of $65.50, suggesting a potential upside of 34.77%. Given MTS Systems’ stronger consensus rating and higher probable upside, analysts plainly believe MTS Systems is more favorable than Hollysys Automation Technologies.
Hollysys Automation Technologies pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. MTS Systems pays an annual dividend of $1.20 per share and has a dividend yield of 2.5%. Hollysys Automation Technologies pays out 10.5% of its earnings in the form of a dividend. MTS Systems pays out 91.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider & Institutional Ownership
70.0% of Hollysys Automation Technologies shares are owned by institutional investors. Comparatively, 97.9% of MTS Systems shares are owned by institutional investors. 1.5% of MTS Systems 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.
Earnings and Valuation
This table compares Hollysys Automation Technologies and MTS Systems’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Hollysys Automation Technologies||$431.94 million||3.44||$68.94 million||$1.14||21.58|
|MTS Systems||$787.96 million||1.10||$25.08 million||$1.31||37.10|
Hollysys Automation Technologies has higher earnings, but lower revenue than MTS Systems. Hollysys Automation Technologies is trading at a lower price-to-earnings ratio than MTS Systems, indicating that it is currently the more affordable of the two stocks.
This table compares Hollysys Automation Technologies and MTS Systems’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Hollysys Automation Technologies||15.46%||9.65%||6.59%|
MTS Systems beats Hollysys Automation Technologies on 9 of the 15 factors compared between the two stocks.
About Hollysys Automation Technologies
Hollysys Automation Technologies Ltd. is a provider of automation and control technologies, and products. The Company’s segments include Industrial Automation (IA), Rail Transportation (rail), Mechanical and Electrical (M&E), and Miscellaneous. Its technologies are applied through its industrial automation solution suite, including the Distributed Control Systems, Programmable Logic Controller, Real-time Management Information System, HolliAS Asset Management System, Operator Training System, Batch Application Package, Advanced Process Control Package (HolliAS APC Suite), Safety Instrumentation System (SIS), railway signaling system of Train Control Center, Automatic Train Protection, Subway Supervisory and Control platform, nuclear power non-safety automation and control system HolliAs-NMS DCS and other products. It serves customers in the industrial, railway, subway, nuclear power, and mechanical and electronic industries in China, Southeast Asia, India, Europe and the Middle East.
About MTS Systems
MTS Systems Corporation is a supplier of test systems and position sensors. The Company operates through two segments: Test and Sensors. The Test segment provides testing solutions, including hardware, software and services to ground vehicles, materials and structures markets. The Sensors segment provides position sensors for a range of industrial and mobile hydraulic applications. The Sensors segment products are used by industrial machinery and mobile equipment manufacturers to automate the operation of their products for safety and end-user productivity. The Sensors segment manufactures products utilizing magnetostriction technology. Its technology, Temposonics, offers non-contact position sensing. Its Temposonics sensors provide position feedback for motion control systems. It also provides various service offerings, including calibration, maintenance, training and consulting. The Company has its manufacturing facilities in North America, Europe and Asia.
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