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Cummins (CMI) Q2 Earnings: What to Expect from the Stock?
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Cummins Inc. (CMI - Free Report) is set to report second-quarter 2016 results on Aug 2. In the last quarter, the company delivered a positive earnings surprise of 5.65%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Cummins has the potential to benefit from its innovative products together with the increased use of its engines by a number of original equipment manufacturers. The company’s Distribution segment is poised to gain from the acquisitions undertaken in North America. The company completed 10 acquisitions in a span of over two years. Together, these should lead to better performance in the quarter to be reported.
However, Cummins expects revenues to decrease in 2016 due to lower levels of production in the North American on-highway markets, reduced demand globally for off-highway and power generation equipment, and the negative impact of currency. Additionally, the company is facing challenges in its Power Generation business due to weak global demand, mainly for larger units. These factors can adversely affect Cummins’ quarterly results.
Earnings Whispers
Our proven model does not conclusively show that Cummins is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Cummins’ Earnings ESP is -5.58% because the Most Accurate estimate stands at $2.03, while the Zacks Consensus Estimate is pegged at $2.15.
Zacks Rank: Cummins carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Westport Fuel Systems Inc. (WPRT - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Aug 3.
Magna International Inc. (MGA - Free Report) has an Earnings ESP of +0.75% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Aug 5.
Cooper Tire & Rubber Co. has an Earnings ESP of +3.60% and a Zacks Rank #3. The company’s second-quarter 2016 results are expected to release on Aug 4.
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Cummins (CMI) Q2 Earnings: What to Expect from the Stock?
Cummins Inc. (CMI - Free Report) is set to report second-quarter 2016 results on Aug 2. In the last quarter, the company delivered a positive earnings surprise of 5.65%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Cummins has the potential to benefit from its innovative products together with the increased use of its engines by a number of original equipment manufacturers. The company’s Distribution segment is poised to gain from the acquisitions undertaken in North America. The company completed 10 acquisitions in a span of over two years. Together, these should lead to better performance in the quarter to be reported.
However, Cummins expects revenues to decrease in 2016 due to lower levels of production in the North American on-highway markets, reduced demand globally for off-highway and power generation equipment, and the negative impact of currency. Additionally, the company is facing challenges in its Power Generation business due to weak global demand, mainly for larger units. These factors can adversely affect Cummins’ quarterly results.
Earnings Whispers
Our proven model does not conclusively show that Cummins is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Cummins’ Earnings ESP is -5.58% because the Most Accurate estimate stands at $2.03, while the Zacks Consensus Estimate is pegged at $2.15.
Zacks Rank: Cummins carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
CUMMINS INC Price and EPS Surprise
CUMMINS INC Price and EPS Surprise | CUMMINS INC Quote
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Westport Fuel Systems Inc. (WPRT - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Aug 3.
Magna International Inc. (MGA - Free Report) has an Earnings ESP of +0.75% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Aug 5.
Cooper Tire & Rubber Co. has an Earnings ESP of +3.60% and a Zacks Rank #3. The company’s second-quarter 2016 results are expected to release on Aug 4.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>