Contrasting Cummins (CMI) & Its Peers

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

Analyst Recommendations

This is a breakdown of recent recommendations for Cummins and its competitors, as provided by MarketBeat.com.

	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 presently 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, equities analysts clearly believe Cummins is more favorable than its competitors.

Risk and Volatility

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

Institutional & Insider Ownership

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

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 competitors as a dividend stock, given its lower dividend yield and higher payout ratio.

Profitability

This table compares Cummins and its competitors’ 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%

Valuation and Earnings

This table compares Cummins and its competitors revenue, earnings per share 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 competitors. Cummins is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Summary

Cummins beats its competitors 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.