Critical Review: Caterpillar (NYSE:CAT) versus Columbus McKinnon Corporation (CMCO)
Caterpillar (NYSE: CAT) and Columbus McKinnon Corporation (NASDAQ:CMCO) are both industrial products companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitabiliy, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.
Valuation and Earnings
This table compares Caterpillar and Columbus McKinnon Corporation’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Caterpillar||$39.89 billion||1.70||$6.14 billion||$0.15||764.73|
|Columbus McKinnon Corporation||$691.84 million||1.06||$79.80 million||$0.64||50.61|
Caterpillar has higher revenue and earnings than Columbus McKinnon Corporation. Columbus McKinnon Corporation is trading at a lower price-to-earnings ratio than Caterpillar, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and target prices for Caterpillar and Columbus McKinnon Corporation, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Columbus McKinnon Corporation||0||0||3||0||3.00|
Caterpillar currently has a consensus target price of $105.95, indicating a potential downside of 7.64%. Columbus McKinnon Corporation has a consensus target price of $33.67, indicating a potential upside of 3.94%. Given Columbus McKinnon Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Columbus McKinnon Corporation is more favorable than Caterpillar.
This table compares Caterpillar and Columbus McKinnon Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Columbus McKinnon Corporation||2.06%||10.30%||3.60%|
Volatility & Risk
Caterpillar has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500. Comparatively, Columbus McKinnon Corporation has a beta of 1.92, suggesting that its share price is 92% more volatile than the S&P 500.
Insider and Institutional Ownership
70.5% of Caterpillar shares are owned by institutional investors. Comparatively, 84.3% of Columbus McKinnon Corporation shares are owned by institutional investors. 0.2% of Caterpillar shares are owned by company insiders. Comparatively, 3.9% of Columbus McKinnon Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Caterpillar pays an annual dividend of $3.12 per share and has a dividend yield of 2.7%. Columbus McKinnon Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. Caterpillar pays out 2,080.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Columbus McKinnon Corporation pays out 25.0% of its earnings in the form of a dividend. Caterpillar has increased its dividend for 7 consecutive years. Caterpillar is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Caterpillar Company Profile
Caterpillar Inc. is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The Company operates through segments, including Construction Industries, which is engaged in supporting customers using machinery in infrastructure, forestry and building construction; Resource Industries, which is engaged in supporting customers using machinery in mining, quarry, waste and material handling applications; Energy & Transportation, which supports customers in oil and gas, power generation, marine, rail and industrial applications, including Cat machines; Financial Products segment, which provides financing and related services, and All Other operating segments, which includes activities, such as product management and development, and manufacturing of filters and fluids, undercarriage, tires and rims, ground engaging tools, fluid transfer products, and sealing and connecting components for Cat products.
Columbus McKinnon Corporation Company Profile
Columbus McKinnon Corporation is a global designer, manufacturer and marketer of hoists, actuators, cranes, rigging tools, digital power control systems, and other material handling products serving various commercial and industrial end user markets. The Company’s products include various electric, air-powered, lever, and hand hoists, hoist trolleys, winches, industrial crane systems, such as steel bridge, gantry and jib cranes and aluminum work station cranes; alloy and carbon steel chain; forged attachments, such as hooks, shackles, textile slings, clamps, logging tools and load binders; mechanical and electromechanical actuators and rotary unions; below-the-hook special purpose lifters and tire shredders; power and motion control systems, such as alternate current (AC) and direct current (DC) drive systems, radio remote controls, push button pendant stations, brakes, and collision avoidance and power delivery subsystems.
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