Financial Analysis: Rush Enterprises (NASDAQ:RUSHA) and GATX (NYSE:GATX)

Rush Enterprises (NASDAQ:RUSHA) and GATX (NYSE:GATX) are both mid-cap industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitability.

Analyst Ratings

This is a summary of current ratings and price targets for Rush Enterprises and GATX, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rush Enterprises	0	1	3	1	3.00
GATX	0	0	4	0	3.00

Rush Enterprises currently has a consensus price target of $50.26, suggesting a potential upside of 11.46%. GATX has a consensus price target of $219.33, suggesting a potential upside of 15.35%. Given GATX’s higher probable upside, analysts plainly believe GATX is more favorable than Rush Enterprises.

Dividends

Rush Enterprises pays an annual dividend of $0.56 per share and has a dividend yield of 1.2%. GATX pays an annual dividend of $2.64 per share and has a dividend yield of 1.4%. Rush Enterprises pays out 24.2% of its earnings in the form of a dividend. GATX pays out 24.5% 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. Rush Enterprises has increased its dividend for 6 consecutive years and GATX has increased its dividend for 15 consecutive years. GATX is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Rush Enterprises and GATX”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rush Enterprises	$7.43 billion	0.71	$263.78 million	$2.31	19.52
GATX	$1.74 billion	3.81	$333.30 million	$10.77	17.65

GATX has lower revenue, but higher earnings than Rush Enterprises. GATX is trading at a lower price-to-earnings ratio than Rush Enterprises, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Rush Enterprises has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500. Comparatively, GATX has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Insider and Institutional Ownership

84.4% of Rush Enterprises shares are held by institutional investors. Comparatively, 93.1% of GATX shares are held by institutional investors. 12.7% of Rush Enterprises shares are held by company insiders. Comparatively, 1.9% of GATX shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Rush Enterprises and GATX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rush Enterprises	3.70%	11.91%	6.03%
GATX	17.69%	10.62%	2.16%

Summary

GATX beats Rush Enterprises on 10 of the 17 factors compared between the two stocks.

About Rush Enterprises

Rush Enterprises, Inc. operates Rush Truck Centers, a network of commercial vehicle dealerships serving customers in the United States and Canada. The company sells new and used heavy-, medium- and light-duty trucks, representing manufacturers such as Peterbilt and other commercial vehicle brands. Its services include truck parts and repairs, collision and body work, leasing and rentals, and related financing and insurance products. Rush also provides aftermarket support designed to help commercial fleets and individual truck operators maintain and manage their vehicles.

About GATX

GATX Corporation is a railcar leasing and asset-management company headquartered in Chicago. Founded in 1898, it has a long history of providing rail transportation equipment and related services to customers across a range of industries. The company’s core business is owning and leasing railcars, including freight cars and tank cars used to transport commodities and industrial products. GATX also provides services such as railcar maintenance, fleet management and remarketing. GATX serves customers in North America and international markets through its rail operations, including businesses in Europe and India.