Critical Contrast: ESAB (NYSE:ESAB) & Highway (NASDAQ:HIHO)

Highway (NASDAQ:HIHO) and ESAB (NYSE:ESAB) are both industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, valuation, institutional ownership, earnings and dividends.

Valuation & Earnings

This table compares Highway and ESAB”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Highway	$7.41 million	0.96	$110,000.00	$0.02	80.50
ESAB	$2.73 billion	2.81	$264.84 million	$4.44	28.51

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

Analyst Ratings

This is a summary of recent ratings for Highway and ESAB, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Highway	0	0	0	0	0.00
ESAB	0	3	5	0	2.63

ESAB has a consensus price target of $137.22, indicating a potential upside of 8.39%. Given ESAB’s stronger consensus rating and higher probable upside, analysts clearly believe ESAB is more favorable than Highway.

Profitability

This table compares Highway and ESAB’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Highway	1.43%	1.63%	1.01%
ESAB	9.98%	16.98%	7.69%

Risk & Volatility

Highway has a beta of 0.26, meaning that its stock price is 74% less volatile than the S&P 500. Comparatively, ESAB has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500.

Insider and Institutional Ownership

13.2% of Highway shares are owned by institutional investors. Comparatively, 91.1% of ESAB shares are owned by institutional investors. 32.1% of Highway shares are owned by company insiders. Comparatively, 7.3% of ESAB shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Highway pays an annual dividend of $0.07 per share and has a dividend yield of 4.3%. ESAB pays an annual dividend of $0.40 per share and has a dividend yield of 0.3%. Highway pays out 350.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ESAB pays out 9.0% of its earnings in the form of a dividend. ESAB has raised its dividend for 3 consecutive years.

Summary

ESAB beats Highway on 14 of the 17 factors compared between the two stocks.

About Highway

Highway Holdings Limited, together with its subsidiaries, manufactures and supplies metal, plastic, electric, and electronic components, subassemblies, and finished products for original equipment manufacturers (OEMs) and contract manufacturers. It operates through two segments, Metal Stamping and Mechanical OEM; and Electric OEM. The company also trades in plastic injection products; and manufactures and assembles automation equipment. Its products are used in the manufacture of products, such as photocopiers, laser printers, print cartridges, electrical connectors, electrical circuits, vacuum cleaners, LED power supplies, stepping motors, pumps for dishwashers, and other washing machine components. In addition, the company assists customers in the design and development of the tooling used in the metal and plastic manufacturing process, as well as provides an array of other manufacturing and engineering services, including metal stamping, screen printing, plastic injection molding, pad printing, and electronic assembly of printed circuit boards. It operates in Hong Kong and China, Europe, North America, and other Asian countries. Highway Holdings Limited was incorporated in 1990 and is headquartered in Sheung Shui, Hong Kong.

About ESAB

ESAB Corporation engages in the formulation, development, manufacture, and supply of consumable products and equipment for use in cutting, joining, automated welding, and gas control equipment. Its comprehensive range of welding consumables includes electrodes, cored and solid wires, and fluxes using a range of specialty and other materials; and cutting consumables comprising electrodes, nozzles, shields, and tips. The company's equipment ranges from portable welding machines to large customized automated cutting and welding systems. It also offers a range of software and digital solutions to help its customers increase their productivity, remotely monitor their welding operations, and digitize their documentation. The company sells its products under the ESAB brand to various end markets, such as general industry, infrastructure, renewable energy, medical and life sciences, transportation, construction, and energy. It offers its products through independent distributors and direct salespeople. The company operates in North America, South America, Europe, the Middle East, India, Africa, and the Asia Pacific. ESAB Corporation was founded in 1904 and is headquartered in North Bethesda, Maryland.