Analyzing Hollysys Automation Technologies (HOLI) & Regal Beloit (RBC)

Hollysys Automation Technologies (NASDAQ: HOLI) and Regal Beloit (NYSE:RBC) are both industrial products companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, institutional ownership, profitability and earnings.

Dividends

Hollysys Automation Technologies pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Regal Beloit pays an annual dividend of $1.04 per share and has a dividend yield of 1.3%. Hollysys Automation Technologies pays out 10.5% of its earnings in the form of a dividend. Regal Beloit pays out 22.6% 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. Regal Beloit has raised its dividend for 8 consecutive years. Regal Beloit is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Hollysys Automation Technologies and Regal Beloit’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hollysys Automation Technologies $431.94 million 3.43 $68.94 million $1.14 21.51
Regal Beloit $3.22 billion 1.09 $203.40 million $4.60 17.22

Regal Beloit has higher revenue and earnings than Hollysys Automation Technologies. Regal Beloit is trading at a lower price-to-earnings ratio than Hollysys Automation Technologies, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Hollysys Automation Technologies and Regal Beloit’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hollysys Automation Technologies 15.46% 9.65% 6.59%
Regal Beloit 6.28% 9.76% 4.84%

Volatility and Risk

Hollysys Automation Technologies has a beta of 1.59, suggesting that its stock price is 59% more volatile than the S&P 500. Comparatively, Regal Beloit has a beta of 1.48, suggesting that its stock price is 48% more volatile than the S&P 500.

Institutional & Insider Ownership

70.7% of Hollysys Automation Technologies shares are held by institutional investors. Comparatively, 93.8% of Regal Beloit shares are held by institutional investors. 2.2% of Regal Beloit shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Hollysys Automation Technologies and Regal Beloit, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hollysys Automation Technologies 1 1 2 0 2.25
Regal Beloit 0 5 5 0 2.50

Hollysys Automation Technologies presently has a consensus price target of $19.65, indicating a potential downside of 19.85%. Regal Beloit has a consensus price target of $86.63, indicating a potential upside of 9.38%. Given Regal Beloit’s stronger consensus rating and higher possible upside, analysts plainly believe Regal Beloit is more favorable than Hollysys Automation Technologies.

Summary

Regal Beloit beats Hollysys Automation Technologies on 11 of the 17 factors compared between the two stocks.

Hollysys Automation Technologies Company Profile

Hollysys Automation Technologies Ltd. is a provider of automation and control technologies, and products. The Company’s segments include Industrial Automation (IA), Rail Transportation (rail), Mechanical and Electrical (M&E), and Miscellaneous. Its technologies are applied through its industrial automation solution suite, including the Distributed Control Systems, Programmable Logic Controller, Real-time Management Information System, HolliAS Asset Management System, Operator Training System, Batch Application Package, Advanced Process Control Package (HolliAS APC Suite), Safety Instrumentation System (SIS), railway signaling system of Train Control Center, Automatic Train Protection, Subway Supervisory and Control platform, nuclear power non-safety automation and control system HolliAs-NMS DCS and other products. It serves customers in the industrial, railway, subway, nuclear power, and mechanical and electronic industries in China, Southeast Asia, India, Europe and the Middle East.

Regal Beloit Company Profile

Regal Beloit Corporation is a manufacturer of electric motors, electrical motion controls, power generation and power transmission products. The Company operates through three segments: the Commercial and Industrial Systems segment, with its principal line of business in medium and large electric motors, power generation products, high-performance drives and controls and capacitors; the Climate Solutions segment, with its principal line of business in small motors, controls and air moving products, and the Power Transmission Solutions segment, with its principal line of business in power transmission gearing, hydraulic pump drives, open gearing and specialty mechanical products which control motion and torque. It sells its products directly to original equipment manufacturers (OEMs), distributors and end users. It operates distribution facilities in Plainfield, Indiana; McAllen, Texas; LaVergne, Tennessee, and Florence, Kentucky.

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