Analyzing Cummins (CMI) and Quanex Building Products Corporation (NX)
Cummins (NYSE: CMI) and Quanex Building Products Corporation (NYSE:NX) are both auto/tires/trucks companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, earnings, risk and profitabiliy.
This is a breakdown of current ratings and recommmendations for Cummins and Quanex Building Products Corporation, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Quanex Building Products Corporation||0||0||2||0||3.00|
Cummins presently has a consensus price target of $150.54, suggesting a potential downside of 9.30%. Quanex Building Products Corporation has a consensus price target of $23.75, suggesting a potential upside of 6.74%. Given Quanex Building Products Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Quanex Building Products Corporation is more favorable than Cummins.
Cummins pays an annual dividend of $4.10 per share and has a dividend yield of 2.5%. Quanex Building Products Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.7%. Cummins pays out 47.0% of its earnings in the form of a dividend. Quanex Building Products Corporation pays out -533.2% 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. Cummins has raised its dividend for 7 consecutive years. Cummins is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Cummins and Quanex Building Products Corporation’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Cummins||$17.81 billion||1.56||$2.36 billion||$8.73||19.01|
|Quanex Building Products Corporation||$901.48 million||0.84||$98.42 million||($0.03)||-741.42|
Cummins has higher revenue and earnings than Quanex Building Products Corporation. Quanex Building Products Corporation is trading at a lower price-to-earnings ratio than Cummins, indicating that it is currently the more affordable of the two stocks.
This table compares Cummins and Quanex Building Products Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Quanex Building Products Corporation||-0.09%||7.70%||3.64%|
Risk & Volatility
Cummins has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500. Comparatively, Quanex Building Products Corporation has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500.
Insider and Institutional Ownership
80.2% of Cummins shares are held by institutional investors. Comparatively, 98.8% of Quanex Building Products Corporation shares are held by institutional investors. 0.6% of Cummins shares are held by insiders. Comparatively, 5.3% of Quanex Building Products Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Cummins beats Quanex Building Products Corporation on 11 of the 16 factors compared between the two stocks.
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 Quanex Building Products Corporation
Quanex Building Products Corporation manufactures components for original equipment manufacturers (OEM) in the building products industry. The Company’s components can be categorized as window and door (fenestration) components, and kitchen and bath cabinet components. The Company operates through three segments: North American Engineered Components (NA Engineered Components), which consists of four operating segments primarily focused on the fenestration market in North America manufacturing vinyl profiles, insulating glass (IG) spacers, screens and other fenestration components; European Engineered Components (EU Engineered Components), which consists of the United Kingdom-based vinyl extrusion business, manufacturing vinyl profiles and conservatories, and the European insulating glass business manufacturing IG spacers, and North American Cabinet Components (NA Cabinet Components), which consists of the North American cabinet door and components business.
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