Updated Research Report on Cummins - Analyst Blog

On Apr 3, 2014, we issued an updated research report on Cummins Inc. CMI.

Cummins posted earnings per share of $1.94 (excluding special items) in the fourth quarter of 2013, compared with $1.93 reported in the year-ago quarter. However, earnings lagged the Zacks Consensus Estimate of $1.98 per share.

Revenues in the quarter rose 6.9% year over year to $4.6 billion, mainly driven by higher revenues in North America, China and Brazil, partially offset by poor sales in Mexico, India and Australia. Revenues surpassed the Zacks Consensus Estimate of $4.3 billion.

Cummins expects to achieve revenues in the range of $25–$31 billion by 2018. The company also projects earnings before interest and taxes (EBIT) to be in a range of 16–18% by 2018.

For 2014, Cummins expects revenues to increase 4% to 8% due to the impact of acquisitions, higher market share in the North American medium duty truck and bus markets, higher demand in the North American heavy duty truck market and increased content in European truck markets related to Euro 6 emission regulations. Cummins also anticipates that earnings will increase at a faster pace than revenues.

Moreover, Cummins is positioned to benefit from its innovative products.However, weakness in operating markets and high competition are downsides.The company is witnessing a challenging situation in India, Australia, Mexico and Europe, which led to a 4% decline in international revenues in 2013.

Cummins currently carries a Zacks Rank #3 (Hold).

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