Cummins (NYSE: CMI) and Foundation Building Materials (NYSE:FBM) are both auto/tires/trucks companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.
Earnings and Valuation
This table compares Cummins and Foundation Building Materials’ gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Cummins | $18.36 billion | 1.38 | $2.35 billion | $8.86 | 17.17 |
| Foundation Building Materials | $1.89 billion | 0.27 | $108.42 million | N/A | N/A |
Cummins has higher revenue and earnings than Foundation Building Materials.
Analyst Ratings
This is a breakdown of recent ratings and recommmendations for Cummins and Foundation Building Materials, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Cummins | 1 | 8 | 5 | 0 | 2.29 |
| Foundation Building Materials | 0 | 2 | 7 | 0 | 2.78 |
Cummins currently has a consensus target price of $156.92, indicating a potential upside of 3.17%. Foundation Building Materials has a consensus target price of $18.43, indicating a potential upside of 55.12%. Given Foundation Building Materials’ stronger consensus rating and higher possible upside, analysts plainly believe Foundation Building Materials is more favorable than Cummins.
Dividends
Cummins pays an annual dividend of $4.32 per share and has a dividend yield of 2.8%. Foundation Building Materials 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.
Insider and Institutional Ownership
80.7% of Cummins shares are held by institutional investors. Comparatively, 90.0% of Foundation Building Materials shares are held by institutional investors. 0.6% of Cummins shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Profitability
This table compares Cummins and Foundation Building Materials’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Cummins | 8.10% | 20.67% | 9.91% |
| Foundation Building Materials | N/A | N/A | N/A |
Summary
Cummins beats Foundation Building Materials on 9 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. 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 Foundation Building Materials
Foundation Building Materials, Inc. is a specialty distributor of wallboard and suspended ceiling systems in the United States and Canada. The Company’s segments include Specialty Building Products and Mechanical Insulation. The Company fabricates and distributes its products for specialty contractors seeking to improve or maintain energy efficiency in a range of commercial and industrial buildings. It serves markets across the United States and in Canada. Specialty building products segment distributes wallboard and accessories, metal framing, suspended ceiling systems and other products. Other products include stucco and Exterior insulation and finish system (EIFS), as well as offerings, such as tools, safety accessories and fasteners. Its Mechanical insulation segment includes insulation solutions for pipes and mechanical systems and the primary end markets served are new non-residential construction, non- residential repair and remodel construction and industrial markets.
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