Generac vs Cummins Which Is Stronger?

Generac and Cummins are two leading players in the power generation industry, offering a wide range of products and services to meet the growing demand for reliable power solutions. Both companies have experienced significant growth in recent years, driven by increased demand for backup power systems in commercial, residential, and industrial sectors. Investors looking to capitalize on this trend may consider investing in Generac or Cummins stocks, but it is essential to carefully analyze factors such as market performance, financial health, and growth prospects before making a decision.

Generac or Cummins?

When comparing Generac and Cummins, 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 Generac and Cummins.

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. Generac has a dividend yield of -%, while Cummins has a dividend yield of 1.89%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Generac reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, Cummins reports a 5-year dividend growth of 7.92% year and a payout ratio of 45.64%.

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 Generac P/E ratio at 35.33 and Cummins's P/E ratio at 24.25. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Generac P/B ratio is 4.29 while Cummins's P/B ratio is 4.93.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Generac has seen a 5-year revenue growth of 1.00%, while Cummins's is 0.64%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Generac's ROE at 12.33% and Cummins's ROE at 22.20%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $171.06 for Generac and $368.12 for Cummins. Over the past year, Generac's prices ranged from $108.89 to $195.94, with a yearly change of 79.94%. Cummins's prices fluctuated between $226.53 and $387.90, with a yearly change of 71.24%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.