Cummins (NYSE: CMI) and Continental Building Products (NYSE:CBPX) are both auto/tires/trucks companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, earnings, institutional ownership, profitability and dividends.

Volatility and Risk

Cummins has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500. Comparatively, Continental Building Products has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500.

Insider & Institutional Ownership

80.4% of Cummins shares are held by institutional investors. 0.6% of Cummins shares are held by insiders. Comparatively, 0.3% of Continental Building Products shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Cummins and Continental Building Products’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cummins $18.36 billion 1.55 $2.35 billion $8.86 19.28
Continental Building Products $474.02 million 2.13 $131.29 million $1.09 24.08

Cummins has higher revenue and earnings than Continental Building Products. Cummins is trading at a lower price-to-earnings ratio than Continental Building Products, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations for Cummins and Continental Building Products, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cummins 1 7 6 0 2.36
Continental Building Products 0 2 2 0 2.50

Cummins presently has a consensus target price of $162.75, indicating a potential downside of 4.72%. Continental Building Products has a consensus target price of $27.67, indicating a potential upside of 5.40%. Given Continental Building Products’ stronger consensus rating and higher probable upside, analysts clearly believe Continental Building Products is more favorable than Cummins.

Profitability

This table compares Cummins and Continental Building Products’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cummins 8.10% 20.67% 9.91%
Continental Building Products 9.16% 15.45% 7.55%

Dividends

Cummins pays an annual dividend of $4.32 per share and has a dividend yield of 2.5%. Continental Building Products does not pay a dividend. Cummins pays out 48.8% of its earnings in the form of a dividend. Cummins has raised its dividend for 7 consecutive years.

Summary

Cummins beats Continental Building Products on 10 of the 17 factors compared between the two stocks.

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.

Continental Building Products Company Profile

Continental Building Products, Inc. is a manufacturer of gypsum wallboard and complementary finishing products. The Company operates through wallboard segment. Gypsum wallboard is a primary building material used in residential and commercial construction and in repair and remodel (R&R). It offers customers a range of gypsum wallboard products, including LiftLite, its lightweight product designed to lift and install; its Mold Defense line of products designed for protection against mold and mildew, and its Weather Defense line of moisture and mold-resistant exterior sheathing. The Company also operates a finishing products business that manufactures a line of joint compounds at its plant in Silver Grove (Kentucky) and its joint compound plant in Chambly (Quebec). The Company manufactures gypsum wallboard related products for commercial and residential buildings and houses. The Company’s manufacturing facilities are concentrated in the eastern United States and eastern Canada.

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