NN (NASDAQ:NNBR) & Highway (NASDAQ:HIHO) Critical Survey

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

Insider and Institutional Ownership

53.9% of NN shares are held by institutional investors. Comparatively, 13.2% of Highway shares are held by institutional investors. 7.9% of NN shares are held by company insiders. Comparatively, 32.1% of Highway shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NN	-8.05%	-0.98%	-0.11%
Highway	-13.84%	-12.30%	-8.68%

Dividends

NN pays an annual dividend of $0.28 per share and has a dividend yield of 19.8%. Highway pays an annual dividend of $0.05 per share and has a dividend yield of 6.2%. NN pays out -26.2% of its earnings in the form of a dividend. Highway pays out -31.3% 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.

Valuation & Earnings

This table compares NN and Highway”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NN	$422.21 million	0.17	-$34.00 million	($1.07)	-1.32
Highway	$5.36 million	0.69	$110,000.00	($0.16)	-5.03

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

Volatility and Risk

NN has a beta of 2.29, suggesting that its stock price is 129% more volatile than the S&P 500. Comparatively, Highway has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for NN and Highway, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NN	2	0	1	0	1.67
Highway	1	0	0	0	1.00

NN currently has a consensus price target of $3.00, suggesting a potential upside of 112.01%. Given NN’s stronger consensus rating and higher possible upside, equities research analysts clearly believe NN is more favorable than Highway.

Summary

NN beats Highway on 11 of the 16 factors compared between the two stocks.

About NN

NN, Inc., together with its subsidiaries, designs, manufactures, and sells high-precision components and assemblies for various end markets in the United States and internationally. It operates through two segments, Mobile Solutions and Power Solutions. The Mobile Solutions segment manufactures and sells system critical components for automotive, general industrial, and medical end markets for use in power steering, braking, transmissions, gasoline fuel system, diesel injection, and diesel emissions treatment applications, as well as in heating, ventilation, and air conditioning. The Power Solutions segment designs, manufactures, and sells a range of high-precision metal and plastic components, assemblies, and finished devices used in various applications, such as power control and transportation electrification. Its products include electrical contacts, connectors, contact assemblies, and precision stampings for the electrical, general industrial, automotive, aerospace and defense, and medical end markets. This segment also produces various tools and instruments for the orthopaedics and medical/surgical end markets. NN, Inc. was founded in 1980 and is headquartered in Charlotte, North Carolina.

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.