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

Dividends

Cummins pays an annual dividend of $4.56 per share and has a dividend yield of 3.3%. American Power Group does not pay a dividend. Cummins pays out 42.9% of its earnings in the form of a dividend. Cummins has raised its dividend for 9 consecutive years.

Earnings and Valuation

This table compares Cummins and American Power Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cummins $20.43 billion 1.10 $999.00 million $10.62 13.12
American Power Group $1.86 million 2.90 -$7.55 million N/A N/A

Cummins has higher revenue and earnings than American Power Group.

Profitability

This table compares Cummins and American Power Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cummins 5.57% 29.17% 12.83%
American Power Group N/A N/A N/A

Risk & Volatility

Cummins has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500. Comparatively, American Power Group has a beta of 7.25, suggesting that its share price is 625% more volatile than the S&P 500.

Insider and Institutional Ownership

80.4% of Cummins shares are held by institutional investors. 0.7% of Cummins shares are held by company insiders. Comparatively, 75.8% of American Power Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Cummins and American Power Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cummins 1 14 7 0 2.27
American Power Group 0 0 0 0 N/A

Cummins presently has a consensus target price of $162.32, indicating a potential upside of 16.50%. Given Cummins’ higher probable upside, equities research analysts plainly believe Cummins is more favorable than American Power Group.

Summary

Cummins beats American Power Group on 10 of the 14 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 worldwide. It operates through four segments: Engine, Distribution, Components, and Power Systems segments. The Engine segment manufactures and markets a range of diesel and natural gas powered engines under the Cummins and other customer brands for the heavy-and medium-duty truck, bus, recreational vehicle, light-duty automotive, construction, mining, marine, rail, oil and gas, defense, and agricultural markets. This segment also offers new parts and services, as well as remanufactured parts and engines. The Distribution segment distributes parts, engines, and power generation products; and provides service solutions, such as maintenance contracts, engineering services, and integrated products. The Components segment offers emission solutions, including custom engineering systems and integrated controls, oxidation catalysts, particulate filters, selective catalytic reduction systems, and engineered components; and turbochargers for light-duty, mid-range, heavy-duty, and high-horsepower diesel markets. This segment also provides air and fuel filters, fuel water separators, lube and hydraulic filters, coolants, fuel additives, and other filtration systems; and fuel systems for heavy-duty on-highway diesel engine applications, as well as remanufactures fuel systems. The Power Generation segment offers components that back-up and prime power generators, controls, paralleling systems, and transfer switches, as well as A/C generator/alternator products under the Stamford, AVK, and Markon brands. Cummins Inc. sells its products to original equipment manufacturers, dealers/distributors, and end users. The company was formerly known as Cummins Engine Company and changed its name to Cummins Inc. in 2001. Cummins Inc. was founded in 1919 and is headquartered in Columbus, Indiana.

About American Power Group

American Power Group Corp. engages in the provision of patented, software driven conversion technology for existing vehicular and stationary diesel engines. It operates through Dual Fuel Conversion Operations, and Natural Gas Liquids. The company founded in 1992 and is headquartered in Lynnfield, MA.

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