Critical Comparison: Lonking (LONKF) versus Caterpillar (CAT)

Lonking (OTCMKTS:LONKF) and Caterpillar (NYSE:CAT) are both industrial products companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, dividends, analyst recommendations and earnings.

Dividends

Caterpillar pays an annual dividend of $3.44 per share and has a dividend yield of 2.7%. Lonking does not pay a dividend. Caterpillar pays out 50.0% of its earnings in the form of a dividend. Caterpillar has increased its dividend for 8 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Lonking and Caterpillar, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lonking 0 0 0 0 N/A
Caterpillar 1 12 15 0 2.50

Caterpillar has a consensus price target of $157.81, suggesting a potential upside of 24.35%. Given Caterpillar’s higher possible upside, analysts plainly believe Caterpillar is more favorable than Lonking.

Insider and Institutional Ownership

66.6% of Caterpillar shares are held by institutional investors. 0.4% of Caterpillar shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Lonking has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500. Comparatively, Caterpillar has a beta of 1.58, indicating that its share price is 58% more volatile than the S&P 500.

Valuation and Earnings

This table compares Lonking and Caterpillar’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lonking $1.33 billion 0.96 $154.75 million N/A N/A
Caterpillar $45.46 billion 1.65 $754.00 million $6.88 18.45

Caterpillar has higher revenue and earnings than Lonking.

Profitability

This table compares Lonking and Caterpillar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lonking N/A N/A N/A
Caterpillar 7.13% 44.13% 8.46%

Summary

Caterpillar beats Lonking on 13 of the 14 factors compared between the two stocks.

Lonking Company Profile

Lonking Holdings Limited, an investment holding company, manufactures and distributes wheel loaders, road rollers, excavators, forklifts, and other construction machinery in Mainland China. The company’s products also include hydraulic excavators, skid steer loaders, motor graders, bulldozers, and stackers. It also develops and produces components, including gearboxes, torque converters, axles, hydraulic components, gear pipes and driver shaft, and other products; and provides loader, excavator, forklift, road machinery, warehouse, and other parts, as well as maintenance and support services. In addition, the company offers finance leasing for construction machinery. Further, it distributes wheel loaders and other machinery; and trades in construction machinery and components. Lonking Holdings Limited was founded in 1993 and is headquartered in Shanghai, the People’s Republic of China.

Caterpillar Company Profile

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for construction, resource, and energy and transportation industries. Its Construction Industries segment offers asphalt pavers, backhoe loaders, compactors, cold planers, compact truck and multi-terrain loaders, forestry excavators, feller bunchers, harvesters, knuckleboom loaders, motorgraders, pipelayers, road reclaimers, site prep tractors, skidders, skid steer loaders, telehandlers, track-type loaders, wheel excavators, and track-type tractors. The company's Resource Industries segment provides electric rope and hydraulic shovels, draglines, track and rotary drills, hard rock vehicles, large track-type vehicles, large mining trucks, longwall miners, large wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, landfill compactors, soil compactors, machinery components, electronics and control systems, select work tools, and hard rock continuous mining systems. Its Energy & Transportation segment offers reciprocating engine powered generator sets; reciprocating engines; integrated systems used in the electric power generation industry; turbines, centrifugal gas compressors, and related services; integrated systems and solutions for the marine and oil and gas industries; remanufactured reciprocating engines and components; and diesel-electric locomotives and components, and other rail-related products and services. Its All Other operating segments manufactures filters and fluids, undercarriage, tires, rims, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components; parts distribution; and digital investments services. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. The company was founded in 1925 and is headquartered in Deerfield, Illinois.

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