Cummins Inc. CMI is a leading global designer, manufacturer and distributor of diesel and natural gas engines, electric power generation systems, and engine-related components, fuel systems, controls and air handling systems. The company is poised to benefit from its innovative products, rising demand for its engines among OEMs, and focus on cost reduction. Further, Cummins is sey to gain from the acquisitions in North America and expansion through partnerships.
However, lower expectations for North American truck production and sluggish demand in global off-highway markets are concerns for Cummins. Additionally, the company is facing challenges in its Power Generation business due to weak global demand, mainly for larger units.
Estimate Trend & Surprise History
Investors should note that the third-quarter earnings estimate for Cummins inched up by 2 cents over the past 30 days.
The company has delivered mixed earnings surprises in recent quarters. It surpassed the Zacks Consensus Estimate in 2 of the trailing 4 quarters and missed in the other two, resulting in an average negative surprise of around 0.38%. Thus, investors have been eagerly awaiting Cummins’ latest earnings report to se how it performs.
We have highlighted some of the key stats from this just-revealed announcement below:
Earnings
Cummins’ adjusted earnings decreased 5.6% to $2.02 per share in the third quarter of 2016, but surpassed the Zacks Consensus Estimate of $1.93.
Revenues
Cummins reported revenues of $4.19 billion, down 9% year over year. Moreover, revenues missed the Zacks Consensus Estimate of $4.26 billion. The year-over-year decline was due to lower truck production in North America and weak international demand for power generation equipment.
Key Stats/Developments to Note
For 2016, Cummins anticipates revenues to decline by 8% to 10%.
EBIT guidance was reduced to 11.3% from the prior range of 11.6%–12.2%.
Zacks Rank
Currently, Cummins has a Zacks Rank #2 (Buy), but that could change following its earnings report which has just released.
Market Reaction
Cummins’ shares were inactive following the release. It would be interesting to see how the market reacts to the results during the trading session today.
Check back later for our full write up on Cummins’ earnings report!
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