Critical Contrast: WEG (OTCMKTS:WEGZY) vs. PACCAR (NASDAQ:PCAR)

PACCAR (NASDAQ:PCAR) and WEG (OTCMKTS:WEGZY) are both large-cap industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, dividends, earnings, profitability, analyst recommendations, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for PACCAR and WEG, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PACCAR	0	8	6	0	2.43
WEG	0	2	1	0	2.33

PACCAR presently has a consensus target price of $133.88, indicating a potential upside of 22.16%. Given PACCAR’s stronger consensus rating and higher probable upside, equities research analysts plainly believe PACCAR is more favorable than WEG.

Earnings & Valuation

This table compares PACCAR and WEG”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PACCAR	$28.44 billion	2.03	$2.38 billion	$4.76	23.02
WEG	$7.31 billion	5.01	$1.14 billion	$0.28	31.12

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

Insider and Institutional Ownership

64.9% of PACCAR shares are held by institutional investors. 2.0% of PACCAR shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares PACCAR and WEG’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PACCAR	9.00%	12.73%	5.69%
WEG	15.39%	32.99%	14.37%

Dividends

PACCAR pays an annual dividend of $1.40 per share and has a dividend yield of 1.3%. WEG pays an annual dividend of $0.05 per share and has a dividend yield of 0.6%. PACCAR pays out 29.4% of its earnings in the form of a dividend. WEG pays out 17.9% 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. PACCAR has raised its dividend for 5 consecutive years. PACCAR is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

PACCAR beats WEG on 10 of the 16 factors compared between the two stocks.

About PACCAR

PACCAR Inc designs, manufactures, and distributes light, medium, and heavy-duty commercial trucks in the United States, Canada, Europe, Mexico, South America, Australia, and internationally. It operates through three segments: Truck, Parts, and Financial Services. The Truck segment designs, manufactures, and distributes trucks for the over-the-road and off-highway hauling of commercial and consumer goods. It sells its trucks through a network of independent dealers under the Kenworth, Peterbilt, and DAF nameplates. The Parts segment distributes aftermarket parts for trucks and related commercial vehicles. The Financial Services segment conducts full-service leasing operations under the PacLease trade name, as well as provides finance and leasing products and services to customers and dealers. This segment also offers equipment financing and administrative support services for its franchisees; retail loan and leasing services for small, medium, and large commercial trucking companies, as well as independent owners/operators and other businesses; and truck inventory financing services to independent dealers. In addition, this segment offers loans and leases directly to customers for the acquisition of trucks and related equipment. The company also manufactures and markets industrial winches under the Braden, Carco, and Gearmatic nameplates. PACCAR Inc was founded in 1905 and is headquartered in Bellevue, Washington.

About WEG

WEG S.A. engages in the production and sale of capital goods in Brazil and internationally. The company offers electric motors, generators, and transformers; gear units and geared motors; hydraulic and steam turbines; frequency converters; motor starters and maneuver devices; control and protection of electric circuits for industrial automation; power sockets and switches; and electric traction solutions for heavy vehicles, SUV vehicles, locomotives, and sea transportation capital goods. It also provides solutions for the generation of renewable and distributed energy through hydro, thermal, biomass, wind, and solar energy power plants; solutions for industry; UPSs and alternators for groups of generators; conventional and movable electric substations; industrial electrical and electronic systems; industrial paint and varnish; and paints for automotive repainting. WEG S.A. was founded in 1961 and is headquartered in Jaraguá do Sul, Brazil.