Contrasting Cubic (CUB) & Arconic (ARNC)

Cubic (NYSE: CUB) and Arconic (NYSE:ARNC) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, earnings, institutional ownership, analyst recommendations, valuation and profitability.

Insider and Institutional Ownership

89.9% of Cubic shares are owned by institutional investors. Comparatively, 74.6% of Arconic shares are owned by institutional investors. 7.9% of Cubic shares are owned by insiders. Comparatively, 0.1% of Arconic shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Cubic pays an annual dividend of $0.27 per share and has a dividend yield of 0.4%. Arconic pays an annual dividend of $0.24 per share and has a dividend yield of 1.0%. Cubic pays out -40.9% of its earnings in the form of a dividend. Arconic pays out -92.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Arconic is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and price targets for Cubic and Arconic, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cubic 0 1 4 0 2.80
Arconic 0 2 5 0 2.71

Cubic presently has a consensus target price of $61.00, indicating a potential downside of 0.16%. Arconic has a consensus target price of $30.43, indicating a potential upside of 20.65%. Given Arconic’s higher probable upside, analysts plainly believe Arconic is more favorable than Cubic.

Earnings & Valuation

This table compares Cubic and Arconic’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cubic $1.49 billion 1.12 -$11.20 million ($0.66) -92.57
Arconic $12.96 billion 0.94 -$74.00 million ($0.26) -97.00

Cubic has higher earnings, but lower revenue than Arconic. Arconic is trading at a lower price-to-earnings ratio than Cubic, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Cubic has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, Arconic has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500.

Profitability

This table compares Cubic and Arconic’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cubic -1.21% -1.27% -0.63%
Arconic -0.57% 11.29% 3.20%

Summary

Arconic beats Cubic on 9 of the 16 factors compared between the two stocks.

About Cubic

Cubic Corporation (Cubic) designs, integrates and operates systems, products and services that provide situational awareness for its customers in the transportation and defense industries. The Company operates in three business segments across the global transportation and defense markets, which include Cubic Transportation Systems (CTS), Cubic Global Defense (CGD) and Cubic Global Defense Services (CGD Services). The Company’s CTS segment is a systems integrator of payment and information technology and services for travel solutions. The Company’s CGD Systems is focused on two primary lines of business: training systems and secure communications (SC) products. The Company’s CGD Services segment is a provider of training, operations, intelligence, maintenance, technical and other support services to the United States government and its agencies and allied nations. It also provides cross-domain hardware solutions to address multi-level security challenges across common networks.

About Arconic

Arconic Inc., formerly Alcoa Inc., is engaged in lightweight metals engineering and manufacturing. The Company operates through three segments: Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions. Its multi-material products, which include aluminum, titanium and nickel, are used around the world in markets, such as aerospace, automotive, commercial transportation and packaging. The Global Rolled Products segment produces a range of aluminum sheet and plate products for the aerospace, automotive, commercial transportation, brazing and industrial markets. The Engineered Products and Solutions segment develops and manufactures products for the aerospace (commercial and defense), commercial transportation and power generation end markets. The Transportation and Construction Solutions segment produces products that are used in the non-residential building and construction and commercial transportation end markets.

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