Comparing Cummins (CMI) and Its Rivals

Cummins (NYSE:CMI) is one of 436 publicly-traded companies in the “Machinery” industry, but how does it contrast to its rivals? We will compare Cummins to similar businesses based on the strength of its earnings, risk, institutional ownership, profitability, dividends, analyst recommendations and valuation.

Analyst Recommendations

This is a breakdown of recent ratings for Cummins and its rivals, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cummins	0	5	13	0	2.72
Cummins Competitors	4190	14674	18172	803	2.41

Cummins currently has a consensus price target of $694.24, suggesting a potential upside of 38.64%. As a group, “Machinery” companies have a potential upside of 31.95%. Given Cummins’ stronger consensus rating and higher probable upside, research analysts plainly believe Cummins is more favorable than its rivals.

Earnings & Valuation

This table compares Cummins and its rivals revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Cummins	$33.67 billion	$2.84 billion	25.59
Cummins Competitors	$4.63 billion	$364.57 million	3.54

Cummins has higher revenue and earnings than its rivals. Cummins is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Cummins and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cummins	7.82%	25.29%	9.88%
Cummins Competitors	-1,044.47%	-15.12%	0.54%

Volatility & Risk

Cummins has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, Cummins’ rivals have a beta of 4.69, meaning that their average share price is 369% more volatile than the S&P 500.

Dividends

Cummins pays an annual dividend of $8.80 per share and has a dividend yield of 1.8%. Cummins pays out 45.0% of its earnings in the form of a dividend. As a group, “Machinery” companies pay a dividend yield of 2.8% and pay out 24.6% of their earnings in the form of a dividend. Cummins has raised its dividend for 19 consecutive years. Cummins lags its rivals as a dividend stock, given its lower dividend yield and higher payout ratio.

Insider and Institutional Ownership

83.5% of Cummins shares are owned by institutional investors. Comparatively, 51.7% of shares of all “Machinery” companies are owned by institutional investors. 0.3% of Cummins shares are owned by insiders. Comparatively, 14.2% of shares of all “Machinery” companies are owned by 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.

Summary

Cummins beats its rivals on 10 of the 15 factors compared.

About Cummins

Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. It operates through five segments: Engine, Distribution, Components, Power Systems, and Accelera. The company offers diesel and natural gas-powered engines under the Cummins and other customer brands for the heavy and medium-duty truck, bus, recreational vehicle, light-duty automotive, construction, mining, marine, rail, oil and gas, defense, and agricultural markets; and offers parts and services, as well as remanufactured parts and engines. It provides power generation systems, horsepower engines, heavy and medium duty engines, application engineering services, custom-designed assemblies, retail and wholesale aftermarket parts, and in-shop and field-based repair services. In addition, the company offers emission solutions; turbochargers; air and fuel filters, fuel water separators, lube and hydraulic filters, coolants, fuel additives, and other filtration systems; and electronic control modules, sensors, and supporting software, as well as new, replacement, and remanufactured fuel systems. Further, it provides automated transmissions; standby and prime power generators, controls, paralleling systems, and transfer switches, as well as A/C generator/alternator products under the Stamford and AVK brands; and electrified power systems with components and subsystems, including battery, fuel cell, and hydrogen production technologies. Additionally, it offers filtration, aftertreatment, controls systems, air handling systems, and electric power generation systems, and batteries. It sells its products to original equipment manufacturers, distributors, dealers, and other customers. The company was formerly known as Cummins Engine Company and changed its name to Cummins Inc. in 2001. Cummins Inc. was founded in 1919 and is headquartered in Columbus, Indiana.