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Will Cummins (CMI) Deliver a Beat This Earnings Season?
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Cummins Inc. (CMI - Free Report) is scheduled to report second-quarter 2018 earnings on Jul 31, before the market opens. In the last reported quarter, the company delivered a positive earnings surprise of 13.4%. In fact, the company beat estimates in three of the trailing four quarters, with an average beat of 8.9%.
In the past three months, shares of Cummins have underperformed the Auto sector. The stock has lost 16.3% compared with the sector’s decline of 4.4% during the period.
Let’s see, how things are shaping up for this announcement.
Our proven model shows that Cummins is likely to beat on earnings this quarter. That is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.
Earnings ESP: Cummins has an Earnings ESP of +1.28%, as the Most Accurate Estimate is pegged at $3.73, higher than the Zacks Consensus Estimate of $3.68. A positive ESP indicates a positive earnings surprise. You can uncover the best stocks to buy or sell, before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cummins currently carries a Zacks Rank of 3. This, when combined with a positive ESP, makes us reasonably confident of an earnings beat.
Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
What’s Driving the Better-Than-Expected Earnings?
Apart from launching products on its own, Cummins collaborates with other companies to offer products in diverse markets. Recently in May, the company announced its plan to form a 50:50 joint-venture with China’s auto manufacturer, Anhui Jianghuai Automobile Co. Ltd. (JAC Motors). Partnership with this well-known company of China will enable Cummins to focus more on the competitive market by developing high-quality and fuel-efficient products. Earlier in October 2017, the company partnered with GILLIG to combine and modify its new battery electric technology.
Further, regular acquisitions will aid Cummins to gain the leading position in electrified power space and develop its product line. Recently, it announced its plan to acquire Efficient Drivetrains, Inc. Earlier in January, it acquired Johnson Matthey’s UK automotive battery systems business, enabling it to expand its electrification and energy storage capabilities.
The company regularly pursues share repurchase programs and dividend payouts to enhance shareholder value. The company aims to return 50% of its full-year cash inflow from operations to shareholders through dividends and share repurchases in 2018, same as the previous year. In June, Cummins paid a dividend of $1.08 to its shareholders.
For the to-be-reported quarterly results, the Zacks Consensus Estimate for net sales of Engine segment is pegged at $2.58 billion, a rise from the first-quarter 2018 actual net sales of $2.45 billion.
Similarly, estimates for net sales at the company’s Distribution segment stands at $1.87 billion, up from the first quarter’s actual net sales of $1.85 billion.
The Zacks Consensus Estimate for net sales of Components segment stands at $1.8 billion, up from the first quarter’s actual net sales of $1.75 billion. The same for net sales in the Power Generation segment is pegged at $1.11 billion compared with the first quarter’s actual net sales of $1.07 billion.
Other Stocks to Consider
Here are a few other stocks worth considering, with the right combination of elements to outpace earnings estimates this time around:
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank #3. Its second-quarter 2018 results are scheduled to release on Aug 3.
Domtar Corporation has an Earnings ESP of +1.70% and a Zacks Rank #1. The company’s second-quarter 2018 financial results are expected to release on Aug 1.
Oshkosh Corporation (OSK - Free Report) has an Earnings ESP of +2.85% and a Zacks Rank #2 (Buy). The company is scheduled to report third-quarter fiscal 2018 results on Jul 31.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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Image: Bigstock
Will Cummins (CMI) Deliver a Beat This Earnings Season?
Cummins Inc. (CMI - Free Report) is scheduled to report second-quarter 2018 earnings on Jul 31, before the market opens. In the last reported quarter, the company delivered a positive earnings surprise of 13.4%. In fact, the company beat estimates in three of the trailing four quarters, with an average beat of 8.9%.
In the past three months, shares of Cummins have underperformed the Auto sector. The stock has lost 16.3% compared with the sector’s decline of 4.4% during the period.
Let’s see, how things are shaping up for this announcement.
Cummins Inc. Price and EPS Surprise
Cummins Inc. Price and EPS Surprise | Cummins Inc. Quote
Why a Likely Positive Surprise?
Our proven model shows that Cummins is likely to beat on earnings this quarter. That is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.
Earnings ESP: Cummins has an Earnings ESP of +1.28%, as the Most Accurate Estimate is pegged at $3.73, higher than the Zacks Consensus Estimate of $3.68. A positive ESP indicates a positive earnings surprise. You can uncover the best stocks to buy or sell, before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cummins currently carries a Zacks Rank of 3. This, when combined with a positive ESP, makes us reasonably confident of an earnings beat.
Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
What’s Driving the Better-Than-Expected Earnings?
Apart from launching products on its own, Cummins collaborates with other companies to offer products in diverse markets. Recently in May, the company announced its plan to form a 50:50 joint-venture with China’s auto manufacturer, Anhui Jianghuai Automobile Co. Ltd. (JAC Motors). Partnership with this well-known company of China will enable Cummins to focus more on the competitive market by developing high-quality and fuel-efficient products. Earlier in October 2017, the company partnered with GILLIG to combine and modify its new battery electric technology.
Further, regular acquisitions will aid Cummins to gain the leading position in electrified power space and develop its product line. Recently, it announced its plan to acquire Efficient Drivetrains, Inc. Earlier in January, it acquired Johnson Matthey’s UK automotive battery systems business, enabling it to expand its electrification and energy storage capabilities.
The company regularly pursues share repurchase programs and dividend payouts to enhance shareholder value. The company aims to return 50% of its full-year cash inflow from operations to shareholders through dividends and share repurchases in 2018, same as the previous year. In June, Cummins paid a dividend of $1.08 to its shareholders.
For the to-be-reported quarterly results, the Zacks Consensus Estimate for net sales of Engine segment is pegged at $2.58 billion, a rise from the first-quarter 2018 actual net sales of $2.45 billion.
Similarly, estimates for net sales at the company’s Distribution segment stands at $1.87 billion, up from the first quarter’s actual net sales of $1.85 billion.
The Zacks Consensus Estimate for net sales of Components segment stands at $1.8 billion, up from the first quarter’s actual net sales of $1.75 billion. The same for net sales in the Power Generation segment is pegged at $1.11 billion compared with the first quarter’s actual net sales of $1.07 billion.
Other Stocks to Consider
Here are a few other stocks worth considering, with the right combination of elements to outpace earnings estimates this time around:
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank #3. Its second-quarter 2018 results are scheduled to release on Aug 3.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Domtar Corporation has an Earnings ESP of +1.70% and a Zacks Rank #1. The company’s second-quarter 2018 financial results are expected to release on Aug 1.
Oshkosh Corporation (OSK - Free Report) has an Earnings ESP of +2.85% and a Zacks Rank #2 (Buy). The company is scheduled to report third-quarter fiscal 2018 results on Jul 31.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>