AZZ (AZZ) versus Hollysys Automation Technologies (HOLI) Head-To-Head Review

AZZ (NYSE: AZZ) and Hollysys Automation Technologies (NASDAQ:HOLI) are both small-cap industrial products companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, valuation, analyst recommendations, profitability and earnings.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AZZ 0 1 0 0 2.00
Hollysys Automation Technologies 1 1 2 0 2.25

AZZ currently has a consensus target price of $56.00, suggesting a potential upside of 10.78%. Hollysys Automation Technologies has a consensus target price of $17.87, suggesting a potential downside of 12.83%. Given AZZ’s higher possible upside, equities analysts clearly believe AZZ is more favorable than Hollysys Automation Technologies.

Valuation & Earnings

This table compares AZZ and Hollysys Automation Technologies’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AZZ $824.81 million 1.59 $143.90 million $2.03 24.90
Hollysys Automation Technologies $431.94 million 2.86 $78.11 million $1.15 17.83

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

Institutional & Insider Ownership

85.3% of AZZ shares are held by institutional investors. Comparatively, 68.0% of Hollysys Automation Technologies shares are held by institutional investors. 0.0% of AZZ shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
AZZ 6.44% 10.98% 5.77%
Hollysys Automation Technologies 15.96% 9.87% 6.74%

Risk and Volatility

AZZ has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500. Comparatively, Hollysys Automation Technologies has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500.

Dividends

AZZ pays an annual dividend of $0.68 per share and has a dividend yield of 1.3%. Hollysys Automation Technologies pays an annual dividend of $0.20 per share and has a dividend yield of 1.0%. AZZ pays out 33.5% of its earnings in the form of a dividend. Hollysys Automation Technologies pays out 17.4% 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. AZZ has raised its dividend for 3 consecutive years. AZZ is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

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

AZZ Company Profile

AZZ Inc. is a provider of galvanizing services, welding solutions, specialty electrical equipment and engineered services to the power generation, transmission, distribution, refining and industrial markets. The Company operates through two segments: Energy segment and Galvanizing segment. Its Energy segment provides products and services designed to support industrial, nuclear and electrical applications. Its product offerings include custom switchgear, electrical enclosures, medium and high voltage bus ducts, explosion proof and hazardous duty lighting, nuclear safety-related equipment and tubular products. Its Galvanizing segment provides hot dip galvanizing to the steel fabrication industry through facilities located throughout the United States and Canada. It serves fabricators or manufacturers that provide services to the electrical and telecommunications, bridge and highway, petrochemical and general industrial markets and various original equipment manufacturers.

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.

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