Cummins (NYSE: CMI) and Apogee Enterprises (NASDAQ:APOG) are both construction supplies & fixtures – nec companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitability and institutional ownership.

Institutional and Insider Ownership

83.9% of Cummins shares are owned by institutional investors. 0.6% of Cummins shares are owned by insiders. Comparatively, 3.1% of Apogee Enterprises shares 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.

Volatility and Risk

Cummins has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500. Comparatively, Apogee Enterprises has a beta of 1.6, indicating that its share price is 60% more volatile than the S&P 500.

Dividends

Cummins pays an annual dividend of $4.32 per share and has a dividend yield of 2.6%. Apogee Enterprises pays an annual dividend of $0.56 per share and has a dividend yield of 1.2%. Cummins pays out 43.9% of its earnings in the form of a dividend. Apogee Enterprises pays out 20.4% 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. Apogee Enterprises has raised its dividend for 7 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for Cummins and Apogee Enterprises, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cummins 2 10 4 0 2.13
Apogee Enterprises 0 0 3 0 3.00

Cummins currently has a consensus price target of $176.93, suggesting a potential upside of 4.73%. Apogee Enterprises has a consensus price target of $63.33, suggesting a potential upside of 35.65%. Given Apogee Enterprises’ stronger consensus rating and higher probable upside, analysts plainly believe Apogee Enterprises is more favorable than Cummins.

Valuation and Earnings

This table compares Cummins and Apogee Enterprises’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Cummins $17.51 billion 1.60 $1.39 billion $9.84 17.17
Apogee Enterprises $1.11 billion 1.20 $85.79 million $2.74 17.04

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

Profitability

This table compares Cummins and Apogee Enterprises’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cummins 8.49% 21.28% 10.18%
Apogee Enterprises 6.57% 17.89% 10.27%

Summary

Cummins beats Apogee Enterprises on 10 of the 17 factors compared between the two stocks.

About Cummins

Cummins Inc. designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products. The Company’s segments include Engine, Distribution, Components and Power Systems. The Engine segment manufactures and markets a range of diesel and natural gas powered engines under the Cummins brand name, as well as certain customer brand names, for the heavy and medium-duty truck, bus, recreational vehicle (RV), light-duty automotive and agricultural markets. The Distribution segment consists of the product lines, which service and/or distribute a range of products and services, including parts, engines, power generation and service. The Components segment supplies products, including aftertreatment systems, turbochargers, filtration products and fuel systems for commercial diesel applications. The Power Systems segment consists of businesses, including Power generation, Industrial and Generator technologies.

About Apogee Enterprises

Apogee Enterprises, Inc. is engaged in the design and development of glass solutions for enclosing commercial buildings and framing art. The Company operates through four segments: Architectural Glass, Architectural Services, Architectural Framing Systems and Large-Scale Optical Technologies (LSO). The Architectural Glass segment fabricates coated glass used in customized window and wall systems. The Architectural Services segment designs, engineers, fabricates and installs the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings. The Architectural Framing Systems segment designs, engineers, fabricates and finishes the aluminum frames used in customized aluminum and glass window, curtainwall, storefront and entrance systems. The Large-Scale Optical Technologies segment manufactures glass and acrylic products for the custom picture framing and fine art markets.

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