Critical Analysis: Atlas Copco (OTCMKTS:ATLKY) and Kawasaki Heavy Industries (OTCMKTS:KWHIY)

Atlas Copco (OTCMKTS:ATLKY) and Kawasaki Heavy Industries (OTCMKTS:KWHIY) are both large-cap industrials companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations for Atlas Copco and Kawasaki Heavy Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atlas Copco	2	3	4	1	2.40
Kawasaki Heavy Industries	0	3	0	0	2.00

Profitability

This table compares Atlas Copco and Kawasaki Heavy Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Atlas Copco	15.69%	25.21%	13.15%
Kawasaki Heavy Industries	4.74%	13.40%	3.49%

Dividends

Atlas Copco pays an annual dividend of $0.35 per share and has a dividend yield of 1.8%. Kawasaki Heavy Industries pays an annual dividend of $0.02 per share and has a dividend yield of 0.3%. Atlas Copco pays out 62.5% of its earnings in the form of a dividend. Kawasaki Heavy Industries pays out 5.7% 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 Atlas Copco and Kawasaki Heavy Industries”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atlas Copco	$17.21 billion	5.51	$2.70 billion	$0.56	34.79
Kawasaki Heavy Industries	$15.35 billion	0.99	$718.49 million	$0.35	20.66

Atlas Copco has higher revenue and earnings than Kawasaki Heavy Industries. Kawasaki Heavy Industries is trading at a lower price-to-earnings ratio than Atlas Copco, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

0.0% of Atlas Copco shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Atlas Copco has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500. Comparatively, Kawasaki Heavy Industries has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Summary

Atlas Copco beats Kawasaki Heavy Industries on 14 of the 15 factors compared between the two stocks.

About Atlas Copco

Atlas Copco AB provides compressed air and gas, vacuum, energy, dewatering and industrial pump, industrial power tool, and assembly and machine vision solutions in North America, South America, Europe, Africa, the Middle East, Asia, and Oceania. It operates through Compressor Technique, Vacuum Technique, Industrial Technique, and Power Technique segments. The company offers piston compressors, oil-free tooth and scroll compressors, rotary screw compressors, oil-free blowers, oil-free centrifugal compressors, gas and process compressors, air and gas treatment equipment, expanders and pumps, and medical air solutions. It also provides oil-sealed rotary vane, dry, and liquid ring vacuum pumps; turbomolecular and cryogenic pumps; abatement and integrated systems; industrial assembly tools and solutions; self-pierce riveting solutions; adhesive dispensing and flow drill fastening equipment; material removal tools, and drills and other pneumatic products; machine vision solutions; construction and demolition tools; mobile compressors, generators, and energy storage systems; and industrial flow, portable power, portable flow, and portable air products, as well as specialty rental services. The company serves the semiconductor and flat panel, industrial manufacturing, civil engineering, demolition, exploration drilling, automotive, off-highway vehicles, electronics, aerospace, energy, food, pharmaceutical, textile, and other industries. Atlas Copco AB was founded in 1873 and is headquartered in Nacka, Sweden.

About Kawasaki Heavy Industries

Kawasaki Heavy Industries, Ltd. engages in aerospace systems, energy solution and marine engineering, precision machinery and robot, rolling stock, and motorcycle and engine businesses in Japan and internationally. It manufactures aircraft for the Japan ministry of defense; helicopters; and helicopter and jet engines for commercial aircrafts. The company also manufactures railway cars; a range of rolling stocks, including Shinkansen, electric cars, passenger coaches, freight cars, locomotives, diesel locomotives, and transit systems. In addition, it engages in the production and sale of energy-related machinery and systems, marine machinery and systems, industrial equipment, and environmental equipment. Further, the company manufactures and supplies motorcycles, off-road four wheelers, watercrafts, general-purpose gasoline engines, etc. Additionally, it manufactures and sells pumps, motors, valves, and various hydraulic machinery, as well as assembles hydraulic systems; and industrial robots for use in welding, assembly, handling, painting, and palletization for various industries, including automotive and electronics industries. The company was founded in 1878 and is headquartered in Tokyo, Japan.