Cummins vs Tesla Which Is Superior?

Cummins and Tesla are two prominent players in the automotive industry, but with vastly different approaches to power sources. Cummins, a traditional manufacturer of diesel engines, is known for its robust technology and reliability. On the other hand, Tesla, the electric vehicle pioneer, has been revolutionizing the market with its innovative electric cars and sustainable energy solutions. This has led to a competition between Cummins' legacy technology and Tesla's cutting-edge advancements, making their stocks a point of interest for investors looking to capitalise on the shifting trends in the automotive sector.

Cummins or Tesla?

When comparing Cummins and Tesla, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Cummins and Tesla.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Cummins has a dividend yield of 1.85%, while Tesla has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Cummins reports a 5-year dividend growth of 7.92% year and a payout ratio of 45.64%. On the other hand, Tesla reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Cummins P/E ratio at 24.71 and Tesla's P/E ratio at 100.94. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Cummins P/B ratio is 5.02 while Tesla's P/B ratio is 18.34.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Cummins has seen a 5-year revenue growth of 0.64%, while Tesla's is 2.63%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Cummins's ROE at 22.20% and Tesla's ROE at 19.29%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $375.08 for Cummins and $390.85 for Tesla. Over the past year, Cummins's prices ranged from $226.53 to $387.90, with a yearly change of 71.24%. Tesla's prices fluctuated between $138.80 and $409.72, with a yearly change of 195.19%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.