Contrasting ARB (OTCMKTS:ARBFF) & Knorr-Bremse (OTCMKTS:KNRRY)

ARB (OTCMKTS:ARBFF) and Knorr-Bremse (OTCMKTS:KNRRY) are both consumer cyclical companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, dividends, earnings, valuation, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and target prices for ARB and Knorr-Bremse, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARB	0	0	0	0	0.00
Knorr-Bremse	1	2	5	0	2.50

Dividends

ARB pays an annual dividend of $0.28 per share and has a dividend yield of 1.7%. Knorr-Bremse pays an annual dividend of $0.33 per share and has a dividend yield of 1.1%. ARB pays out 48.6% of its earnings in the form of a dividend. Knorr-Bremse pays out 33.3% 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.

Profitability

This table compares ARB and Knorr-Bremse’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARB	N/A	N/A	N/A
Knorr-Bremse	7.08%	17.17%	6.13%

Institutional & Insider Ownership

22.0% of ARB shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares ARB and Knorr-Bremse”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARB	N/A	N/A	N/A	$0.59	28.66
Knorr-Bremse	$8.84 billion	2.18	$604.17 million	$0.99	30.25

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

Summary

Knorr-Bremse beats ARB on 9 of the 11 factors compared between the two stocks.

About ARB

ARB Corporation Limited engages in the design, manufacture, distribution, and sale of motor vehicle accessories and light metal engineering works. The company provides bull bars, side rails and steps, canopies, UTE lids and tub accessories, roof racks, cross bars and carriers, suspension systems, driving lights, air compressors and tire accessories, air lockers, winches, recovery equipment and points, under vehicle protection products, fuel tanks and storage, drawers and cargo solutions, slide kitchen, portable fridge freezers, tents, swags and awnings, camping and touring accessories, safari snorkels, dual battery and solar systems, interior protection, and general accessories, as well as rear protection, towing, and wheel carriers. It also offers LINX, a controller that declutters the dashboard and centralizes the command of vehicle accessories by replacing classic switches, gauges, and monitors with one sleek and smart driver interface; and UHF radios, GPS, and reversing cameras. The company serves stockists, vehicle dealers, and various fleet operators, as well as owns and license ARB branded store network. The company has operations in Australia, New Zealand, the United States, Thailand, the Middle East, Europe, and the United Kingdom. ARB Corporation Limited was founded in 1975 and is based in Kilsyth, Australia.

About Knorr-Bremse

Knorr-Bremse AG, together with its subsidiaries, engages in the development, production, marketing, and servicing of braking and other systems for rail and commercial vehicles worldwide. The company operates in two segments, Rail Vehicle Systems and Commercial Vehicle Systems. The Rail Vehicle Systems segment offers braking systems, entrance and HVAC systems, sanitary systems, coupling systems, digital solutions, smart services for optimizing rail traffic, power electrics, rail computing and communication (RCC)/TCMS, signaling systems, stationary and mobile testing equipment, windshield wiper and wash systems, and extensive aftermarket solutions. The Commercial Vehicle Systems segment provides pneumatic braking systems comprising brake control systems, disk brakes, drum brakes, brake cylinders, valves, and pedal units; steering systems; vehicle dynamics solutions, such as anti-lock braking systems and electronic stability programs; driver assistance systems; automated driving and electronic leveling control; energy supply and distribution systems, including compressors and air treatment products; and engine components and transmission control systems, such as vibration dampers, engine air management, transmission control, and gear/clutch actuation products for trucks, buses, trailers, and agricultural machinery. In addition, it offers leasing, holding, logistics, and media and IT services. The company was founded in 1905 and is headquartered in Munich, Germany. Knorr-Bremse AG is a subsidiary of KB Holding GmbH.