Capstone Turbine (CPST) versus Cummins (CMI) Head-To-Head Review

Capstone Turbine (NASDAQ: CPST) and Cummins (NYSE:CMI) are both industrial products companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, analyst recommendations and dividends.

Volatility and Risk

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Capstone Turbine has a beta of 0.26, meaning that its stock price is 74% less volatile than the S&P 500. Comparatively, Cummins has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500.

Valuation & Earnings

This table compares Capstone Turbine and Cummins’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Capstone Turbine $77.17 million 0.82 -$23.92 million ($0.78) -1.50
Cummins $20.43 billion 1.29 $999.00 million $10.62 14.98

Cummins has higher revenue and earnings than Capstone Turbine. Capstone Turbine 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 Capstone Turbine and Cummins’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capstone Turbine -15.01% -66.93% -23.93%
Cummins 4.89% 22.18% 10.45%

Analyst Recommendations

This is a summary of current ratings for Capstone Turbine and Cummins, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capstone Turbine 0 0 4 0 3.00
Cummins 1 13 6 0 2.25

Capstone Turbine currently has a consensus target price of $2.00, suggesting a potential upside of 70.94%. Cummins has a consensus target price of $186.00, suggesting a potential upside of 16.91%. Given Capstone Turbine’s stronger consensus rating and higher probable upside, research analysts clearly believe Capstone Turbine is more favorable than Cummins.

Institutional & Insider Ownership

11.3% of Capstone Turbine shares are held by institutional investors. Comparatively, 84.2% of Cummins shares are held by institutional investors. 1.8% of Capstone Turbine shares are held by company insiders. Comparatively, 0.7% of Cummins shares are held by company 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.

Dividends

Cummins pays an annual dividend of $4.32 per share and has a dividend yield of 2.7%. Capstone Turbine does not pay a dividend. Cummins pays out 40.7% of its earnings in the form of a dividend. Cummins has raised its dividend for 8 consecutive years.

Summary

Cummins beats Capstone Turbine on 12 of the 16 factors compared between the two stocks.

Capstone Turbine Company Profile

Capstone Turbine Corporation develops, manufactures, markets, and services microturbine technology solutions for use in stationary distributed power generation applications worldwide. It offers microturbine units, components, and various accessories for applications, including cogeneration comprising combined heat and power (CHP) and integrated CHP, as well as combined cooling, heat, and power; and renewable energy, natural resources, and critical power supply. The company's microturbines are also used as battery charging generators for hybrid electric vehicle applications. It also provides various accessories, including rotary gas compressors with digital controls; heat recovery modules for CHP applications; dual mode controllers that allow automatic transition between grid connect and stand-alone modes; batteries with digital controls for stand-alone or dual-mode operations; batteries with digital controls; power servers for multipacked installations; protocol converters for Internet access; packaging options; and miscellaneous parts, such as frames, exhaust ducting, backflow dampers, and installation hardware. In addition, the company remanufactures microturbine engines; and provides after-market parts and services. It markets and sells its products primarily through distributors and original equipment manufacturers. Capstone Turbine Corporation was founded in 1988 and is headquartered in Van Nuys, California.

Cummins Company Profile

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.

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