Comparing Meritor (NYSE:MTOR) & Icahn Enterprises (NYSE:IEP)

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Meritor (NYSE:MTOR) and Icahn Enterprises (NASDAQ:IEP) are both auto/tires/trucks companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, earnings, profitability, institutional ownership, valuation and risk.

Risk & Volatility

Meritor has a beta of 2.45, meaning that its stock price is 145% more volatile than the S&P 500. Comparatively, Icahn Enterprises has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Meritor and Icahn Enterprises, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meritor 0 5 3 0 2.38
Icahn Enterprises 1 0 0 0 1.00

Meritor presently has a consensus target price of $23.38, suggesting a potential upside of 2.75%. Icahn Enterprises has a consensus target price of $55.00, suggesting a potential upside of 10.42%. Given Icahn Enterprises’ higher probable upside, analysts clearly believe Icahn Enterprises is more favorable than Meritor.

Insider & Institutional Ownership

95.6% of Meritor shares are held by institutional investors. Comparatively, 98.0% of Icahn Enterprises shares are held by institutional investors. 3.5% of Meritor shares are held by insiders. Comparatively, 90.1% of Icahn Enterprises shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Meritor and Icahn Enterprises’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Meritor 8.63% 35.42% 4.88%
Icahn Enterprises -22.90% -18.89% -8.40%

Earnings & Valuation

This table compares Meritor and Icahn Enterprises’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Meritor $4.39 billion 0.37 $291.00 million $3.82 5.96
Icahn Enterprises $8.99 billion 1.19 -$1.10 billion ($5.23) -9.52

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

Summary

Meritor beats Icahn Enterprises on 8 of the 13 factors compared between the two stocks.

About Meritor

Meritor, Inc. designs, develops, manufactures, markets, distributes, sells, services, and supports integrated systems, modules, and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation, and industrial sectors. It operates through two segments, Commercial Truck; and Aftermarket, Industrial and Trailer. The Commercial Truck segment supplies drivetrain systems and components, including axles, drivelines, and braking and suspension systems primarily for medium-and heavy-duty trucks and other applications; and undercarriage products and systems for trailer applications. The Aftermarket, Industrial and Trailer segment supplies axles, brakes, drivelines, suspension parts, and other replacement parts to commercial vehicle and industrial aftermarket customers. It also supplies drivetrain systems and various components, such as axles, drivelines, brakes, and suspension systems for military, construction, bus and coach, fire and emergency, and other applications. The company sells its products under the Meritor, Euclid, Trucktechnic, and Mach brands primarily to OEMs and its parts marketing operations, and dealers, as well as for other independent distributors and service garages in the aftermarket industry in North America, South America, Europe, and the Asia Pacific. The company was formerly known as ArvinMeritor, Inc. and changed its name to Meritor, Inc. in March 2011. Meritor, Inc. was founded in 1921 and is headquartered in Troy, Michigan.

About Icahn Enterprises

Icahn Enterprises L.P., through its subsidiaries, operates in investment, energy, automotive, food packaging, metals, real estate, home fashion, and mining businesses in the United States and Internationally. Its Investment segment operates various private investment funds. The company's Automotive segment is involved in the retail and wholesale distribution of automotive parts in the aftermarket, as well as offers automotive repair and maintenance services. Its Energy segment refines and markets transportation fuels; and manufactures ammonia and urea ammonium nitrate solution fertilizer products. The company's Metals segment collects, processes, and sells ferrous and non-ferrous metals, as well as processes and distributes steel pipe and plate products. Its Mining segment produces and sells iron ore products to the steel industry. The company's Food Packaging segment produces and sells cellulosic, fibrous, and plastic casings for the processed meat and poultry industry. Its Real Estate segment is involved in the rental of office and industrial properties; construction and sale of single-family and multi-family homes, lots in subdivisions and planned communities, and raw land for residential development; and operation of golf and club. The company's Home Fashion segment manufactures, sources, markets, distributes, and sells home fashion consumer products. Icahn Enterprises L.P. was founded in 1987 and is headquartered in New York, New York.

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