Puradyn Filter Technologies (OTCMKTS:PFTI) and Meritor (NYSE:MTOR) are both small-cap auto/tires/trucks companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Profitability

This table compares Puradyn Filter Technologies and Meritor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Puradyn Filter Technologies -67.31% N/A -57.85%
Meritor 5.65% 71.38% 11.14%

Institutional and Insider Ownership

95.6% of Meritor shares are held by institutional investors. 37.3% of Puradyn Filter Technologies shares are held by insiders. Comparatively, 3.5% of Meritor shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and target prices for Puradyn Filter Technologies and Meritor, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Puradyn Filter Technologies 0 0 0 0 N/A
Meritor 0 4 2 0 2.33

Meritor has a consensus price target of $24.74, indicating a potential upside of 1.05%. Given Meritor’s higher probable upside, analysts clearly believe Meritor is more favorable than Puradyn Filter Technologies.

Earnings and Valuation

This table compares Puradyn Filter Technologies and Meritor’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Puradyn Filter Technologies $4.20 million 0.16 -$220,000.00 N/A N/A
Meritor $4.39 billion 0.41 $291.00 million $3.82 6.41

Meritor has higher revenue and earnings than Puradyn Filter Technologies.

Volatility and Risk

Puradyn Filter Technologies has a beta of 1.29, suggesting that its share price is 29% more volatile than the S&P 500. Comparatively, Meritor has a beta of 2.27, suggesting that its share price is 127% more volatile than the S&P 500.

Summary

Meritor beats Puradyn Filter Technologies on 10 of the 11 factors compared between the two stocks.

About Puradyn Filter Technologies

Puradyn Filter Technologies, Inc. designs, manufactures, markets, and distributes bypass oil filtration systems for use with internal combustion engines and hydraulic equipment that use lubricating oil worldwide. The company offers its products under the Puradyn name. Its Puradyn system cleans oil by providing a loop circuit of oil filtration and treatment to continually remove solid, liquid, and gaseous contaminants from the oil through a filtration and absorption process. The company also manufactures disposable replacement filter elements for the Puradyn system. Its products are marketed to various industries that include hydraulic applications, and other users of engines or equipment that utilize up to 50 weight oil for lubrication. The company sells its products directly, as well as through manufacturer's representatives, distributors, or other agents to OEMs, other distributors, and national accounts. It serves oil and gas services, power generation, construction and forestry, commercial marine, mining, and transportation industries. The company was founded in 1987 and is based in Boynton Beach, Florida.

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.

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