Lear Corporation (NYSE: LEA) and Horizon Global Corporation (NYSE:HZN) are both auto/tires/trucks companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitabiliy, institutional ownership, analyst recommendations, valuation and risk.

Risk & Volatility

Lear Corporation has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500. Comparatively, Horizon Global Corporation has a beta of 1.93, suggesting that its share price is 93% more volatile than the S&P 500.

Insider & Institutional Ownership

97.6% of Lear Corporation shares are owned by institutional investors. Comparatively, 92.3% of Horizon Global Corporation shares are owned by institutional investors. 0.5% of Lear Corporation shares are owned by insiders. Comparatively, 1.3% of Horizon Global Corporation 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.

Dividends

Lear Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 1.4%. Horizon Global Corporation does not pay a dividend. Lear Corporation pays out 13.3% of its earnings in the form of a dividend. Horizon Global Corporation has raised its dividend for 6 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Lear Corporation and Horizon Global Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lear Corporation 3 3 4 0 2.10
Horizon Global Corporation 0 3 4 0 2.57

Lear Corporation presently has a consensus target price of $147.60, indicating a potential upside of 1.49%. Horizon Global Corporation has a consensus target price of $20.17, indicating a potential upside of 8.25%. Given Horizon Global Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Horizon Global Corporation is more favorable than Lear Corporation.

Profitability

This table compares Lear Corporation and Horizon Global Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lear Corporation 5.51% 32.34% 10.51%
Horizon Global Corporation -1.45% 18.86% 2.76%

Valuation & Earnings

This table compares Lear Corporation and Horizon Global Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lear Corporation $19.29 billion 0.51 $1.97 billion $15.06 9.66
Horizon Global Corporation $792.20 million 0.59 $58.76 million ($0.67) -27.81

Lear Corporation has higher revenue and earnings than Horizon Global Corporation. Horizon Global Corporation is trading at a lower price-to-earnings ratio than Lear Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Lear Corporation beats Horizon Global Corporation on 8 of the 15 factors compared between the two stocks.

Lear Corporation Company Profile

Lear Corporation (Lear) is a supplier to the global automotive industry. The Company is engaged in supplying seating, electrical distribution systems and electronic modules, as well as related sub-systems, components and software, to automotive manufacturers. The Company’s segments include Seating and E-Systems. The Company serves the automotive and light truck market. The Seating segment consists of the design, development, engineering, just-in-time assembly and delivery of complete seat systems, as well as the design, development, engineering and manufacture of all seat components, including seat covers and surface materials, such as leather and fabric, seat structures and mechanisms, seat foam and headrests. The E-Systems segment consists of the design, development, engineering, manufacture, assembly and supply of electrical distribution systems, electronic modules and related components and software for light vehicles across the world.

Horizon Global Corporation Company Profile

Horizon Global Corporation is a designer, manufacturer and distributor of a range of custom-engineered towing, trailering, cargo management and other products serving the automotive aftermarket, retail and original equipment (OE) channels. The Company operates through three segments: Horizon Americas, Horizon Asia-Pacific, and Horizon Europe-Africa. Its towing product category includes devices and accessories installed on a tow-vehicle for the purpose of attaching a trailer and camper, among others, such as hitches and other towing accessories. Its trailering product category includes control devices and components of the trailer itself, such as brake controls and brake replacement parts. Its cargo management product category includes a range of products used to facilitate the transportation of various forms of cargo, to secure that cargo or to organize items. Its other product category includes a range of items, such as tubular push bars, side steps, and commercial brooms and brushes.

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