Critical Analysis: Cummins (CMI) versus The Competition

Cummins (NYSE: CMI) is one of 25 publicly-traded companies in the “Construction Supplies & Fixtures” industry, but how does it contrast to its rivals? We will compare Cummins to related businesses based on the strength of its analyst recommendations, profitability, valuation, institutional ownership, risk, earnings and dividends.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cummins 1 7 6 0 2.36
Cummins Competitors 97 537 828 23 2.52

Cummins presently has a consensus price target of $162.75, suggesting a potential downside of 1.67%. As a group, “Construction Supplies & Fixtures” companies have a potential upside of 18.07%. Given Cummins’ rivals stronger consensus rating and higher probable upside, analysts plainly believe Cummins has less favorable growth aspects than its rivals.

Risk & Volatility

Cummins has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Cummins’ rivals have a beta of 1.40, meaning that their average share price is 40% more volatile than the S&P 500.

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 8.10% 20.67% 9.91%
Cummins Competitors -23.91% 870.33% 5.77%

Dividends

Cummins pays an annual dividend of $4.32 per share and has a dividend yield of 2.6%. Cummins pays out 48.8% of its earnings in the form of a dividend. As a group, “Construction Supplies & Fixtures” companies pay a dividend yield of 1.6% and pay out 31.7% of their earnings in the form of a dividend. Cummins has increased its dividend for 7 consecutive years.

Valuation & Earnings

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

Gross Revenue EBITDA Price/Earnings Ratio
Cummins $18.36 billion $2.35 billion 18.68
Cummins Competitors $2.53 billion $322.23 million 27.22

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

Institutional and Insider Ownership

80.4% of Cummins shares are owned by institutional investors. Comparatively, 83.9% of shares of all “Construction Supplies & Fixtures” companies are owned by institutional investors. 0.6% of Cummins shares are owned by company insiders. Comparatively, 8.5% of shares of all “Construction Supplies & Fixtures” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Cummins rivals beat Cummins on 10 of the 15 factors compared.

Cummins Company Profile

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.

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