Tower International (TOWR) and Tenneco (TEN) Head-To-Head Review

Tower International (NYSE: TOWR) and Tenneco (NYSE:TEN) are both auto/tires/trucks companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, earnings, analyst recommendations and dividends.

Analyst Recommendations

This is a summary of recent ratings and price targets for Tower International and Tenneco, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tower International 0 1 2 0 2.67
Tenneco 0 6 4 0 2.40

Tower International presently has a consensus price target of $35.50, indicating a potential upside of 22.63%. Tenneco has a consensus price target of $64.10, indicating a potential upside of 33.68%. Given Tenneco’s higher possible upside, analysts plainly believe Tenneco is more favorable than Tower International.

Dividends

Tower International pays an annual dividend of $0.48 per share and has a dividend yield of 1.7%. Tenneco pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. Tower International pays out 12.8% of its earnings in the form of a dividend. Tenneco pays out 14.5% 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. Tower International has raised its dividend for 2 consecutive years.

Profitability

This table compares Tower International and Tenneco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tower International 2.32% 28.77% 6.15%
Tenneco 2.10% 50.58% 7.43%

Risk and Volatility

Tower International has a beta of 2.33, indicating that its share price is 133% more volatile than the S&P 500. Comparatively, Tenneco has a beta of 1.83, indicating that its share price is 83% more volatile than the S&P 500.

Valuation and Earnings

This table compares Tower International and Tenneco’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tower International $1.99 billion 0.30 $47.62 million $3.76 7.70
Tenneco $9.27 billion 0.27 $207.00 million $6.89 6.96

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

Insider and Institutional Ownership

90.7% of Tower International shares are held by institutional investors. Comparatively, 95.3% of Tenneco shares are held by institutional investors. 6.2% of Tower International shares are held by company insiders. Comparatively, 3.0% of Tenneco shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Tenneco beats Tower International on 9 of the 17 factors compared between the two stocks.

Tower International Company Profile

Tower International, Inc. manufactures and sells engineered automotive structural metal components and assemblies primarily for original equipment manufacturers. It operates in two segments, North America and Europe. The company provides body structures and assemblies, including structural metal components, which comprise body pillars, roof rails, and side sills; and Class A surfaces and assemblies that consist of body sides, hoods, doors, fenders, and pickup truck boxes. It also offers lower vehicle frames and structures, such as pickup truck and sport utility vehicle (SUV) full frames, automotive engine and rear suspension cradles, floor pan components, and cross members. In addition, the company offers complex body-in-white assemblies comprising various components and sub-assemblies. Its products have applications in small and large cars, crossovers, pickups, and SUVs. The company was formerly known as Tower Automotive, LLC and changed its name to Tower International, Inc. in October 2010. Tower International, Inc. was founded in 1993 and is headquartered in Livonia, Michigan.

Tenneco Company Profile

Tenneco Inc. designs, manufactures, and distributes clean air and ride performance products and systems for light vehicle, commercial truck, off-highway, and other vehicle applications worldwide. The company offers various vehicle emission control products and systems, including catalytic converters and diesel oxidation catalysts, diesel particulate filters, burner systems, lean nitrogen oxide (NOx) traps, hydrocarbon vaporizers and injectors, selective catalytic reduction (SCR) systems, SCR-coated diesel particulate filters systems, urea dosing systems, four-way catalysts, alternative NOx reduction technologies, mufflers and resonators, fabricated exhaust manifolds, pipes, hydroformed assemblies, elastomeric hangers and isolators, and after treatment control units. It also provides ride performance products and systems, such as shock absorbers; struts; vibration control components; kinetic suspension technology systems, dual-mode suspension solutions, semi-active and active suspension systems, and kinetic H2/continuously variable semi-active continuously variable semi active suspension systems; and other ride performance products comprising load assist products, springs, steering stabilizers, adjustable suspension systems, suspension kits, and modular assemblies. The company offers its products to original equipment vehicle designers and manufacturers, and repair and replacement markets under the Monroe, Kinetic, Fric-Rot, Gas-Matic, Sensa-Trac, OESpectrum, Quick-Strut, Walker, Fonos, XNOx, Mega-Flow, Quiet-Flow, Tru-Fit, DynoMax, Thrush, Rancho, Clevite Elastomers, and Axios brand names. The company was formerly known as Tenneco Automotive Inc. and changed its name to Tenneco Inc. in 2005. Tenneco Inc. was founded in 1987 and is headquartered in Lake Forest, Illinois.

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