Critical Review: ZKH Group (NYSE:ZKH) versus Willis Lease Finance (NASDAQ:WLFC)

Willis Lease Finance (NASDAQ:WLFC) and ZKH Group (NYSE:ZKH) are both small-cap industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Profitability

This table compares Willis Lease Finance and ZKH Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Willis Lease Finance	11.80%	14.11%	2.64%
ZKH Group	-0.02%	-0.06%	-0.03%

Volatility and Risk

Willis Lease Finance has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500. Comparatively, ZKH Group has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500.

Insider and Institutional Ownership

93.7% of Willis Lease Finance shares are owned by institutional investors. Comparatively, 9.5% of ZKH Group shares are owned by institutional investors. 53.3% of Willis Lease Finance shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Willis Lease Finance and ZKH Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Willis Lease Finance	0	1	1	1	3.00
ZKH Group	1	0	0	0	1.00

Willis Lease Finance currently has a consensus target price of $75.50, suggesting a potential upside of 34.37%. Given Willis Lease Finance’s stronger consensus rating and higher probable upside, analysts plainly believe Willis Lease Finance is more favorable than ZKH Group.

Valuation & Earnings

This table compares Willis Lease Finance and ZKH Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Willis Lease Finance	$730.24 million	1.63	$113.76 million	$3.99	14.08
ZKH Group	$1.29 billion	0.29	-$19.44 million	($0.01)	-290.50

Willis Lease Finance has higher earnings, but lower revenue than ZKH Group. ZKH Group is trading at a lower price-to-earnings ratio than Willis Lease Finance, indicating that it is currently the more affordable of the two stocks.

Summary

Willis Lease Finance beats ZKH Group on 14 of the 15 factors compared between the two stocks.

About Willis Lease Finance

Willis Lease Finance Corporation operates as a lessor and servicer of commercial aircraft and aircraft engines worldwide. The company operates through two segments, Leasing and Related Operations, and Spare Parts Sales. The Leasing and Related Operations segment engages in acquiring and leasing commercial aircraft, aircraft engines, and other aircraft equipment, as well as the purchase and resale of commercial aircraft engines and other aircraft equipment, and other related businesses. The Spare Parts Sales segment purchases and resells after-market engine parts, whole engines, engine modules, and portable aircraft components. The company also focuses on engine management and consulting business. It serves commercial aircraft operators, as well as maintenance, repair, and overhaul organizations. As of December 31, 2023, it had a total lease portfolio of 337 engines, 12 aircraft, one marine vessel, and other leased parts and equipment, and with 74 lessees in 42 countries; and managed a total lease portfolio of 198 engines, aircraft, and related equipment for other parties. The company was founded in 1985 and is headquartered in Coconut Creek, Florida.

About ZKH Group

ZKH Group Limited develops and operates a maintenance, repair, and operating (MRO) products trading and service platform that offers spare parts, chemicals, manufacturing parts, general consumables, and office supplies in the People’s Republic of China. The company provides MRO procurement and management services; digitalized MRO procurement solutions; and logistics and warehousing services. It also engages in the production and sale of intelligent warehousing equipment. ZKH Group Limited was founded in 1998 and is based in Shanghai, the People’s Republic of China.