Caterpillar (NYSE:CAT) & Timken (NYSE:TKR) Head to Head Analysis

Caterpillar (NYSE:CAT) and Timken (NYSE:TKR) are both industrials companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.

Analyst Ratings

This is a summary of current recommendations and price targets for Caterpillar and Timken, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Caterpillar	0	12	15	0	2.56
Timken	0	3	7	0	2.70

Caterpillar presently has a consensus price target of $989.17, indicating a potential upside of 23.55%. Timken has a consensus price target of $147.00, indicating a potential upside of 26.37%. Given Timken’s stronger consensus rating and higher possible upside, analysts plainly believe Timken is more favorable than Caterpillar.

Insider and Institutional Ownership

71.0% of Caterpillar shares are held by institutional investors. Comparatively, 89.1% of Timken shares are held by institutional investors. 0.3% of Caterpillar shares are held by insiders. Comparatively, 8.1% of Timken shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Caterpillar and Timken”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Caterpillar	$67.59 billion	5.45	$8.88 billion	$23.24	34.45
Timken	$4.58 billion	1.76	$288.40 million	$3.69	31.52

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

Dividends

Caterpillar pays an annual dividend of $6.52 per share and has a dividend yield of 0.8%. Timken pays an annual dividend of $1.44 per share and has a dividend yield of 1.2%. Caterpillar pays out 28.1% of its earnings in the form of a dividend. Timken pays out 39.0% 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. Caterpillar has raised its dividend for 30 consecutive years and Timken has raised its dividend for 12 consecutive years.

Risk and Volatility

Caterpillar has a beta of 1.58, indicating that its stock price is 58% more volatile than the S&P 500. Comparatively, Timken has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Caterpillar	14.51%	55.53%	11.38%
Timken	5.43%	12.63%	6.21%

Summary

Caterpillar beats Timken on 12 of the 17 factors compared between the two stocks.

About Caterpillar

Caterpillar Inc. manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives in worldwide. Its Construction Industries segment offers asphalt pavers, compactors, road reclaimers, forestry machines, cold planers, material handlers, track-type tractors, excavators, telehandlers, motor graders, and pipelayers; compact track, wheel, track-type, backhoe, and skid steer loaders; and related parts and tools. The company's Resource Industries segment provides electric rope and hydraulic shovels, draglines, rotary drills, hard rock vehicles, tractors, mining trucks, wheel loaders, off-highway and articulated trucks, wheel tractor scrapers and dozers, fleet management products, landfill and soil compactors, machinery components, autonomous ready vehicles and solutions, work tools, and safety services and mining performance solutions, as well as related parts and services. Its Energy & Transportation segment offers reciprocating engine powered generator sets; reciprocating engines, drivetrain, and integrated systems and solutions; turbines, centrifugal gas compressors, and related services; and diesel-electric locomotives and components, and other rail-related products. The company's Financial Products segment provides operating and finance leases, installment sale contracts, revolving charge accounts, repair/rebuild financing services, working capital loans, and wholesale financing; and insurance and risk management products and services. Its All Other Operating segment offers filters and fluids, undercarriage, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components; parts distribution; logistics solutions and distribution services; brand management and marketing strategy services; and digital investments services. Caterpillar Inc. was founded in 1925 and is headquartered in Irving, Texas.

About Timken

The Timken Company designs, manufactures, and sells engineered bearings and industrial motion products, and related services in the United States and internationally. The company's Engineered Bearings segment provides various bearing products, including tapered, spherical, and cylindrical roller bearings; plain bearings, metal-polymer bearings, and rod end bearings; radial, angular, and precision ball bearings; thrust and specialty ball bearings; journal bearings; and housed or mounted bearings. This segment serves wind energy, agriculture, construction, food and beverage, metals and mining, automotive and truck, aerospace, rail, and other industries under the Timken, GGB, and Fafnir brands. Its Industrial Motion segment offers a portfolio of engineered products comprising industrial drives, automatic lubrication systems, linear motion products and systems, chains, belts, seals, couplings, filtration systems, and industrial clutches and brakes. It also provides industrial drivetrain and bearing repairing services. This segment serves a range of industries, such as solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical, and others under the Philadelphia Gear, Cone Drive, Rollon, Nadella, Groeneveld, BEKA, Diamond, Drives, Timken Belts, Spinea, Des-Case, Lagersmit, Lovejoy, and PT Tech brands. The Timken Company was founded in 1899 and is headquartered in North Canton, Ohio.