Reviewing Lear (NYSE:LEA) and Continental (OTCMKTS:CTTAY)

Continental (OTCMKTS:CTTAY) and Lear (NYSE:LEA) are both consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, institutional ownership, risk and earnings.

Institutional and Insider Ownership

0.0% of Continental shares are owned by institutional investors. Comparatively, 97.0% of Lear shares are owned by institutional investors. 1.0% of Lear shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Continental pays an annual dividend of $0.21 per share and has a dividend yield of 2.8%. Lear pays an annual dividend of $3.08 per share and has a dividend yield of 2.6%. Continental pays out -70.0% of its earnings in the form of a dividend. Lear pays out 28.7% 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. Continental is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings and recommmendations for Continental and Lear, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Continental	0	4	5	0	2.56
Lear	0	12	3	1	2.31

Lear has a consensus target price of $143.58, suggesting a potential upside of 21.20%. Given Lear’s higher probable upside, analysts plainly believe Lear is more favorable than Continental.

Risk & Volatility

Continental has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500. Comparatively, Lear has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500.

Earnings & Valuation

This table compares Continental and Lear”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Continental	$22.26 billion	0.67	-$186.68 million	($0.30)	-24.80
Lear	$23.26 billion	0.25	$436.80 million	$10.73	11.04

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

Profitability

This table compares Continental and Lear’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Continental	-1.36%	-10.86%	-2.63%
Lear	2.35%	14.18%	4.88%

Summary

Lear beats Continental on 11 of the 17 factors compared between the two stocks.

About Continental

Continental Aktiengesellschaft, a technology company, offers intelligent solutions for vehicles, machines, traffic, and transportation worldwide. It operates through four sectors: Automotive, Tires, ContiTech, and Contract Manufacturing. The company offers safety, brake, chassis, motion, and motion control systems; solutions for assisted and automated driving; display and operating technologies; and audio and camera solutions for the vehicle interior, as well as intelligent information and communication technology solutions. It also provides tires for cars, trucks, buses, two-wheel, and specialist vehicles, as well as digital tire monitoring and management systems; and engages in retail of tires. In addition, the company develops products and systems made from rubber, plastic, metal and textiles for the energy, agriculture, and construction, as well as interior design, automotive, transportation, and railway engineering sectors; and provides contract manufacturing services. The company was formerly known as Continental-Caoutchouc- und Gutta-Percha Compagnie. Continental Aktiengesellschaft was founded in 1871 and is headquartered in Hanover, Germany.

About Lear

Lear Corporation designs, develops, engineers, manufactures, assembles, and supplies automotive seating, and electrical distribution systems and related components for automotive original equipment manufacturers in North America, Europe, Africa, Asia, and South America. Its Seating segment offers seat systems, seat subsystems, keyseat components, seat trim covers, seat mechanisms, seat foams, and headrests, as well as surface materials, such as leather and fabric for automobiles and light trucks, compact cars, pick-up trucks, and sport utility vehicles. The company’s E-Systems segment provides electrical distribution and connection systems that route electrical signals and networks; and manage electrical power within the vehicle for various powertrains. This segment’s products comprise wire harnesses, terminals and connectors, engineered components, and junction boxes; electronic system products, including body domain control modules, smart and passive junction boxes, gateway and communication modules, integrated power modules, and high voltage switching and power control systems. It also offers software and connected services comprising Xevo Market, an in-vehicle commerce and service platform; and software and services for the cloud, vehicles, and mobile devices. In addition, this segment provides cybersecurity software; advanced vehicle positioning for automated and autonomous driving applications; and short-range communication and cellular protocols for vehicle connectivity. It offers its products and services under the XEVO, GUILFORD, EAGLE OTTAWA, ConfigurE+, INTUTM, LEAR CONNEXUSTM, EXO, JOURNEYWARE, ProTec, SMART JUNCTION BOX, STRUCSURE, AVENTINO, and TeXstyle brands. Lear Corporation was founded in 1917 and is headquartered in Southfield, Michigan.