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Cummins (CMI) Down 1.1% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Cummins (CMI - Free Report) . Shares have lost about 1.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Cummins due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cummins Q2 Earnings Beat Mark
Cummins reported second-quarter 2022 earnings of $4.77 per share, rising from $4.15 in the prior year quarter. The figure topped the Zacks Consensus Estimate of $4.37. Higher-than-expected EBITDA in the Engine, Distribution and Components segments resulted in the outperformance. Cummins’ revenues totaled $6,586 million, up 7.8% from $6,111 million recorded in the year-ago quarter. The top line beat Zacks Consensus Estimate of $6,477 million.
Key Takeaways
In the reported quarter, sales in the Engine segment were up 11% year over year to $2,775 million. The metric crossed the Zacks Consensus Estimate of $2,665 million. The segment’s EBITDA rose to $422 million (accounting for 15.2% of sales) from $402 million (16.1% of sales). The metric also beat the Zacks Consensus Estimate of $381 million. On-highway revenues climbed 16%, driven by pricing actions and strong demand in the North American truck markets, strong aftermarket demand and recovery in the bus market. Off-highway revenues declined 8%, led by a slowdown in China construction. Sales increased 15% in North America and 1% in international markets.
Sales in the Distribution segment totaled $2,253 million, up 17% year over year and beat the consensus mark of $2,110 million. The segment’s EBITDA came in at $297 million (13.2% of sales), up from the previous year’s $201 million (10.5% of sales). The metric also beat the consensus mark of $217 million.. Revenues from North America jumped 21%, while international sales soared 10%. Higher revenues were driven by increased demand for parts and service.
Sales in the Components segment were down 2% from the prior-year quarter to $1,950 million and lagged the consensus mark of $2,063 million. Sales in North America were up 13%, while the same in international markets decreased 19% amid weak demand from China. The segment’s EBITDA was $352 million (18.1% of sales) compared with the year-ago figure of $301 million (15.1% of sales). The metric topped the Zacks Consensus Estimate of $329 million.
Sales in the Power Systems segment rose 5% from the year-ago quarter to $1,203 million but lagged the consensus mark of $1,213 million. The segment’s EBITDA decreased to $128 million (10.6% of sales) from $139 million (12.2% of sales) and lagged the consensus mark of $136 million. Power generation revenues were flat, while industrial revenues rose 7%, owing to stronger demand in mining and oil and gas markets.
Sales in the New Power segment came in at $42 million, soaring 75% from the year-ago level but lagging the consensus metric of $48 million. The segment incurred a pretax loss of $80 million, which was wider than the consensus mark of $73 million.
Financials
Cummins’ cash and cash equivalents were $2,462 million as of Jun 30, 2022, down from $2,592 million on Dec 31, 2021. Long-term debt totaled $3,490 million, down from $3,579 million on Dec 31, 2021.
2022 Outlook
Cummins maintained its 2022 guidance for revenues. It continues to expect revenues to grow 8% year over year. EBITDA forecast remains unchanged at 15.5% of sales. It plans to return nearly 50% of operating cash flow to shareholders in the form of dividends and share repurchases.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Cummins has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cummins has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Cummins (CMI) Down 1.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Cummins (CMI - Free Report) . Shares have lost about 1.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Cummins due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cummins Q2 Earnings Beat Mark
Cummins reported second-quarter 2022 earnings of $4.77 per share, rising from $4.15 in the prior year quarter. The figure topped the Zacks Consensus Estimate of $4.37. Higher-than-expected EBITDA in the Engine, Distribution and Components segments resulted in the outperformance. Cummins’ revenues totaled $6,586 million, up 7.8% from $6,111 million recorded in the year-ago quarter. The top line beat Zacks Consensus Estimate of $6,477 million.
Key Takeaways
In the reported quarter, sales in the Engine segment were up 11% year over year to $2,775 million. The metric crossed the Zacks Consensus Estimate of $2,665 million. The segment’s EBITDA rose to $422 million (accounting for 15.2% of sales) from $402 million (16.1% of sales). The metric also beat the Zacks Consensus Estimate of $381 million. On-highway revenues climbed 16%, driven by pricing actions and strong demand in the North American truck markets, strong aftermarket demand and recovery in the bus market. Off-highway revenues declined 8%, led by a slowdown in China construction. Sales increased 15% in North America and 1% in international markets.
Sales in the Distribution segment totaled $2,253 million, up 17% year over year and beat the consensus mark of $2,110 million. The segment’s EBITDA came in at $297 million (13.2% of sales), up from the previous year’s $201 million (10.5% of sales). The metric also beat the consensus mark of $217 million.. Revenues from North America jumped 21%, while international sales soared 10%. Higher revenues were driven by increased demand for parts and service.
Sales in the Components segment were down 2% from the prior-year quarter to $1,950 million and lagged the consensus mark of $2,063 million. Sales in North America were up 13%, while the same in international markets decreased 19% amid weak demand from China. The segment’s EBITDA was $352 million (18.1% of sales) compared with the year-ago figure of $301 million (15.1% of sales). The metric topped the Zacks Consensus Estimate of $329 million.
Sales in the Power Systems segment rose 5% from the year-ago quarter to $1,203 million but lagged the consensus mark of $1,213 million. The segment’s EBITDA decreased to $128 million (10.6% of sales) from $139 million (12.2% of sales) and lagged the consensus mark of $136 million. Power generation revenues were flat, while industrial revenues rose 7%, owing to stronger demand in mining and oil and gas markets.
Sales in the New Power segment came in at $42 million, soaring 75% from the year-ago level but lagging the consensus metric of $48 million. The segment incurred a pretax loss of $80 million, which was wider than the consensus mark of $73 million.
Financials
Cummins’ cash and cash equivalents were $2,462 million as of Jun 30, 2022, down from $2,592 million on Dec 31, 2021. Long-term debt totaled $3,490 million, down from $3,579 million on Dec 31, 2021.
2022 Outlook
Cummins maintained its 2022 guidance for revenues. It continues to expect revenues to grow 8% year over year. EBITDA forecast remains unchanged at 15.5% of sales. It plans to return nearly 50% of operating cash flow to shareholders in the form of dividends and share repurchases.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Cummins has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cummins has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.