PACCAR vs Cummins

PACCAR and Cummins are two major players in the automotive industry, renowned for their production of high-quality trucks and engines. Both companies have seen fluctuations in their stock performance over the years, with investors closely monitoring their financial reports and market trends. PACCAR, known for brands like Kenworth and Peterbilt, has a strong presence in the trucking market, while Cummins is a leader in engine manufacturing. Understanding the factors influencing their stock prices is crucial for investors looking to make informed decisions in the market.

PACCAR or Cummins?

When comparing PACCAR 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 PACCAR 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. PACCAR has a dividend yield of 4.01%, while Cummins has a dividend yield of 2.03%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. PACCAR reports a 5-year dividend growth of 25.29% year and a payout ratio of 45.46%. On the other hand, Cummins reports a 5-year dividend growth of 7.92% year and a payout ratio of 48.61%.

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 PACCAR P/E ratio at 11.45 and Cummins's P/E ratio at 23.86. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. PACCAR P/B ratio is 3.21 while Cummins's P/B ratio is 4.86.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, PACCAR has seen a 5-year revenue growth of 0.50%, while Cummins's is 0.64%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with PACCAR's ROE at 29.87% and Cummins's ROE at 20.40%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $106.13 for PACCAR and $333.64 for Cummins. Over the past year, PACCAR's prices ranged from $80.94 to $125.50, with a yearly change of 55.05%. Cummins's prices fluctuated between $212.80 and $338.74, with a yearly change of 59.18%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.