Critical Analysis: Komatsu (OTCMKTS:KMTUY) and Hitachi Constr (OTCMKTS:HTCMY)

Komatsu (OTCMKTS:KMTUY) and Hitachi Constr (OTCMKTS:HTCMY) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Profitability

This table compares Komatsu and Hitachi Constr’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Komatsu	10.70%	13.56%	7.56%
Hitachi Constr	N/A	N/A	N/A

Institutional & Insider Ownership

0.2% of Komatsu shares are held by institutional investors. 2.9% of Komatsu shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

Komatsu has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, Hitachi Constr has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Komatsu and Hitachi Constr, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Komatsu	0	1	0	0	2.00
Hitachi Constr	0	0	0	0	0.00

Dividends

Komatsu pays an annual dividend of $1.30 per share and has a dividend yield of 3.9%. Hitachi Constr pays an annual dividend of $2.29 per share and has a dividend yield of 4.0%. Komatsu pays out 41.8% of its earnings in the form of a dividend. Hitachi Constr pays out 42.0% 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.

Earnings and Valuation

This table compares Komatsu and Hitachi Constr”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Komatsu	$26.95 billion	1.16	$2.89 billion	$3.11	10.59
Hitachi Constr	$9.01 billion	0.67	$537.42 million	$5.45	10.46

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

Summary

Komatsu beats Hitachi Constr on 12 of the 14 factors compared between the two stocks.

About Komatsu

Komatsu Ltd. manufactures and sells construction, mining, and utility equipment in Japan, the Americas, Europe, China, Rest of Asia, Oceania, the Middle East, Africa, and CIS countries. It operates through three segments: Construction, Mining and Utility Equipment; Retail Finance; and Industrial Machinery and Others. The company offers construction and mining equipment, including excavators, wheel loaders, bulldozers, motor graders, dump truck, rope and hybrid shovels, electric wheel loaders, continuous miners, and jumbo drills. It also provides forestry equipment, including harvesters, forwarders, feller bunchers, excavators, mini excavators, and forklifts; demolition, waste, and recycling equipment, such as mobile crushers, hydraulic excavators, wheel loaders, and mini shovels; material handling equipment; and tunnel-boring machines, pipe layers, towing tractors, and engines. In addition, the company offers industrial machinery, including presses, sheet-metal machinery, 3D laser cutting machine, transfer machines, battery manufacturing equipment, wire saws, thermos modules, thermoelectric generation module, and temperature control products; quarry equipment; agricultural and livestock equipment; EH sensor device; iron and steel casting products; and logistics equipment. Further, the company provides retail financing; construction machinery rental services; remanufactured products; other support services; transportation, warehousing, packing, and other services; and purchases and sells used equipment. Komatsu Ltd. was founded in 1884 and is headquartered in Tokyo, Japan.

About Hitachi Constr

Hitachi Construction Machinery Co., Ltd., together with its subsidiaries, manufactures and sells construction machineries worldwide. The company operates through two segments, Construction Machinery Business and Solution Business. It offers excavators and wheel loaders, hydraulic excavators, compaction equipment, and rigid dump trucks. The company also provides ICT construction solutions; ConSite that monitors machines' operational status and alarms by sending monthly operational reports, as well as notifies emergency alarms; Fleet management system, which offers real-time monitoring of dump truck for optimizing vehicle operations; and autonomous haulage system for autonomous operation of mining dump trucks. In addition, it provides parts and services; used equipment under the PREMIUM USED brand; machinery rental services under the PREMIUM RENTAL and REC brand names; and parts remanufacturing services. The company was incorporated in 1951 and is headquartered in Taito, Japan. Hitachi Construction Machinery Co., Ltd. is a subsidiary of Hitachi, Ltd.