Contrasting CNH Industrial (CNHI) and Caterpillar (CAT)

Caterpillar (NYSE: CAT) and CNH Industrial (NYSE:CNHI) are both large-cap industrial products companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, valuation, analyst recommendations, institutional ownership and risk.

Volatility and Risk

Caterpillar has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, CNH Industrial has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Dividends

Caterpillar pays an annual dividend of $3.12 per share and has a dividend yield of 2.3%. CNH Industrial does not pay a dividend. Caterpillar pays out 45.3% of its earnings in the form of a dividend. Caterpillar has increased its dividend for 8 consecutive years.

Insider & Institutional Ownership

66.8% of Caterpillar shares are owned by institutional investors. Comparatively, 19.3% of CNH Industrial shares are owned by institutional investors. 0.4% of Caterpillar shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Caterpillar and CNH Industrial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Caterpillar 1 9 15 0 2.56
CNH Industrial 0 4 8 0 2.67

Caterpillar presently has a consensus price target of $173.48, suggesting a potential upside of 27.87%. CNH Industrial has a consensus price target of $15.17, suggesting a potential upside of 44.03%. Given CNH Industrial’s stronger consensus rating and higher possible upside, analysts clearly believe CNH Industrial is more favorable than Caterpillar.

Earnings and Valuation

This table compares Caterpillar and CNH Industrial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Caterpillar $45.46 billion 1.78 $754.00 million $6.88 19.72
CNH Industrial $27.36 billion 0.52 $295.00 million $0.48 21.94

Caterpillar has higher revenue and earnings than CNH Industrial. Caterpillar is trading at a lower price-to-earnings ratio than CNH Industrial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Caterpillar and CNH Industrial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Caterpillar 4.59% 34.38% 6.48%
CNH Industrial 1.56% 18.25% 1.67%

Summary

Caterpillar beats CNH Industrial on 13 of the 17 factors compared between the two stocks.

About Caterpillar

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for construction, resource, and energy and transportation industries. Its Construction Industries segment offers asphalt pavers, backhoe loaders, compactors, cold planers, compact truck and multi-terrain loaders, forestry excavators, feller bunchers, harvesters, knuckleboom loaders, motorgraders, pipelayers, road reclaimers, site prep tractors, skidders, skid steer loaders, telehandlers, track-type loaders, wheel excavators, and track-type tractors. The company's Resource Industries segment provides electric rope and hydraulic shovels, draglines, track and rotary drills, hard rock vehicles, large track-type vehicles, large mining trucks, longwall miners, large wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, landfill compactors, soil compactors, machinery components, electronics and control systems, select work tools, and hard rock continuous mining systems. Its Energy & Transportation segment offers reciprocating engine powered generator sets; reciprocating engines; integrated systems used in the electric power generation industry; turbines, centrifugal gas compressors, and related services; integrated systems and solutions for the marine and oil and gas industries; remanufactured reciprocating engines and components; and diesel-electric locomotives and components, and other rail-related products and services. Its All Other operating segments manufactures filters and fluids, undercarriage, tires, rims, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components; parts distribution; and digital investments services. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. The company was founded in 1925 and is headquartered in Deerfield, Illinois.

About CNH Industrial

CNH Industrial N.V. designs, produces, markets, sells, and finances agricultural and construction equipment, trucks, commercial vehicles, and buses worldwide. The company operates in five segments: Agricultural Equipment, Construction Equipment, Commercial Vehicles, Powertrain, and Financial Services. The Agricultural Equipment segment offers farm machinery and implements, including two- and four-wheel drive tractors, crawler tractors, combines, cotton pickers, grape and sugar cane harvesters, hay and forage equipment, planting and seeding equipment, soil preparation and cultivation implements, and material handling equipment. It provides its products under the New Holland Agriculture, Case IH Agriculture, Steyr, Miller, Kongskilde, Överum, and JF brands. The Construction Equipment segment offers excavators, crawler dozers, graders, wheel and backhoe loaders, skid steer and compact track loaders, and telehandlers under the Case Construction and New Holland Construction Equipment brands. The Commercial Vehicles segment provides light, medium, and heavy vehicles for the transportation and distribution of goods under the Iveco brand; commuter buses and touring coaches under the Iveco Bus and Heuliez Bus brands; quarry and mining equipment under the Iveco Astra brand; firefighting vehicles under the Magirus brand; and vehicles for civil defense and peace-keeping missions under the Iveco Defence Vehicles brand. The Powertrain segment offers engines, transmission systems, and axles for on- and off-road applications, as well as for marine and power generation under the FPT Industrial brand. The Financial Services segment provides and administers retail financing to customers for the purchase or lease of new and used industrial equipment or vehicles, and other equipment; and wholesale financing, which consists primarily of floor plan financing to CNH Industrial dealers. The company is headquartered in London, the United Kingdom.

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