Cummins (NYSE: CMI) and Apogee Enterprises (NASDAQ:APOG) are both auto/tires/trucks companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Institutional & Insider Ownership

81.1% of Cummins shares are owned by institutional investors. 0.6% of Cummins shares are owned by company insiders. Comparatively, 3.1% of Apogee Enterprises 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.

Dividends

Cummins pays an annual dividend of $4.32 per share and has a dividend yield of 2.4%. Apogee Enterprises pays an annual dividend of $0.56 per share and has a dividend yield of 1.2%. Cummins pays out 48.8% 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. Cummins has increased its dividend for 7 consecutive years. Cummins is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Cummins has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500. Comparatively, Apogee Enterprises has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500.

Earnings and Valuation

This table compares Cummins and Apogee Enterprises’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cummins $18.36 billion 1.64 $2.35 billion $8.86 20.36
Apogee Enterprises $1.20 billion 1.13 $159.52 million $2.74 17.26

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 8.10% 20.67% 9.91%
Apogee Enterprises 6.57% 17.89% 10.27%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Cummins and Apogee Enterprises, as reported by MarketBeat.

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 $166.07, suggesting a potential downside of 7.92%. Apogee Enterprises has a consensus price target of $63.33, suggesting a potential upside of 33.95%. Given Apogee Enterprises’ stronger consensus rating and higher probable upside, analysts plainly believe Apogee Enterprises is more favorable than Cummins.

Summary

Cummins beats Apogee Enterprises on 11 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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