Motorcar Parts of America (NASDAQ:MPAA) and Garrett Motion (NYSE:GTX) are both small-cap auto/tires/trucks companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, dividends, profitability, institutional ownership, earnings and analyst recommendations.

Profitability

This table compares Motorcar Parts of America and Garrett Motion’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Motorcar Parts of America -1.73% 9.93% 4.41%
Garrett Motion 34.50% -44.81% 50.86%

Insider & Institutional Ownership

84.1% of Garrett Motion shares are held by institutional investors. 5.5% of Motorcar Parts of America shares are held by company insiders. Comparatively, 0.4% of Garrett Motion shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Motorcar Parts of America and Garrett Motion, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Motorcar Parts of America 0 1 2 0 2.67
Garrett Motion 2 4 1 0 1.86

Motorcar Parts of America currently has a consensus price target of $22.50, suggesting a potential upside of 45.54%. Garrett Motion has a consensus price target of $13.67, suggesting a potential upside of 52.53%. Given Garrett Motion’s higher possible upside, analysts clearly believe Garrett Motion is more favorable than Motorcar Parts of America.

Earnings & Valuation

This table compares Motorcar Parts of America and Garrett Motion’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Motorcar Parts of America $472.80 million 0.62 -$7.85 million $1.51 10.24
Garrett Motion $3.38 billion 0.20 $1.18 billion $4.05 2.21

Garrett Motion has higher revenue and earnings than Motorcar Parts of America. Garrett Motion is trading at a lower price-to-earnings ratio than Motorcar Parts of America, indicating that it is currently the more affordable of the two stocks.

Summary

Garrett Motion beats Motorcar Parts of America on 7 of the 13 factors compared between the two stocks.

About Motorcar Parts of America

Motorcar Parts of America, Inc. manufactures, remanufactures, and distributes heavy duty trucks, and industrial and agricultural application parts. The company offers rotating electrical products, including alternators and starters; wheel hub assemblies and bearings; brake master cylinders; and other products, such as turbochargers, brake power boosters, and diagnostic equipment. It sells its products to automotive retail chain stores and warehouse distributors, as well as various automobile manufacturers for their aftermarket programs and warranty replacement programs in North America. The company was founded in 1968 and is headquartered in Torrance, California.

About Garrett Motion

Garrett Motion Inc. designs, manufactures, and sells turbocharger and electric boosting technologies for light and commercial vehicle original equipment manufacturers and the aftermarket worldwide. The company offers light vehicle gasoline and diesel, and commercial vehicle turbochargers. Its integrated vehicle health management tools detect intermittent faults and anomalies to provide understanding of the real-time health of a vehicle system. The company offers its products through distribution networks. Garrett Motion Inc. was incorporated in 2018 and is headquartered in Rolle, Switzerland.

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