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Cummins (CMI) Earnings and Revenues Miss Estimates in Q3
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Cummins Inc. (CMI - Free Report) reported earnings of $3.83 per share in third-quarter 2019, missing the Zacks Consensus Estimate of $3.84. Lower-than-expected profits from the Engine segment led to the underperformance. Earnings before interest & tax for the segment were $341 million, missing the Zacks Consensus Estimate of $403 million.
In the reported quarter, net income attributable to the company was $622 million compared with net income of $692 million in the prior-year quarter.
Its revenues declined 3% year over year to $5.76 billion in the reported quarter. Moreover, revenues missed the Zacks Consensus Estimate of $5.83 billion.
Earnings before interest, taxes, depreciation and amortization (EBITDA) declined to $958 million (16.6% of sales) from $983 million (16.5% of sales) recorded in the prior-year quarter.
Sales for the Engine segment declined 11% year over year at $2.4 billion. The segment’s EBITDA declined to $341 million (14.1% of sales) from $405 million (14.9% of sales) a year ago.
Sales for the Distribution segment grew 4% to $2 billion. The segment’s EBITDA rose to $186 million (9.3% of sales) from $155 million (8% of sales) a year ago.
Sales for the Components segment declined 6% to $1.7 billion. The segment’s EBITDA was $286 million (17.3% of sales) compared with the year-ago quarter figure of $288 million (16.4% of sales).
Sales for the Power Generation segment improved 2% to $1.1 billion. The segment’s EBITDA declined to $158 million (14% of sales) in third-quarter 2019 from $163 million (14.7% of sales) in the year-ago quarter.
Sales for the Electrified Power segment were $9 million. The segment witnessed EBITDA loss of $36 million.
Financial Position
Cummins’ cash and cash equivalents were $1.6 billion as of Sep 29, 2019, up from $1.3 billion as of Dec 31, 2018. Long-term debt totaled $1.62 billion as of Sep 29, 2019, compared with $1.60 as of Dec 31, 2018.
Outlook
For 2019, Cummins now projects revenue decline of 2%. Initially, it expected revenues to remain at the same level as 2018. The company revised projection downward on lower truck production in North America, India, Brazil and Europe, and a decline in demand in off-highway markets, including North America construction and global mining. EBITDA is now expected to be 15.9-16.3% (compared with previously mentioned 16.25-16.75%) on lower volume and the Hydrogenics acquisition. Further, the company anticipates returning 75% of operating cash flow to shareholders in forms of dividends and share repurchases.
BRP has an expected earnings growth rate of 18.4% for 2019.
Sonic Automotive has an estimated earnings growth rate of 37.8% for 2019.
Lithia Motors has an estimated earnings growth rate of 15.1% for 2019.
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Cummins (CMI) Earnings and Revenues Miss Estimates in Q3
Cummins Inc. (CMI - Free Report) reported earnings of $3.83 per share in third-quarter 2019, missing the Zacks Consensus Estimate of $3.84. Lower-than-expected profits from the Engine segment led to the underperformance. Earnings before interest & tax for the segment were $341 million, missing the Zacks Consensus Estimate of $403 million.
In the reported quarter, net income attributable to the company was $622 million compared with net income of $692 million in the prior-year quarter.
Its revenues declined 3% year over year to $5.76 billion in the reported quarter. Moreover, revenues missed the Zacks Consensus Estimate of $5.83 billion.
Earnings before interest, taxes, depreciation and amortization (EBITDA) declined to $958 million (16.6% of sales) from $983 million (16.5% of sales) recorded in the prior-year quarter.
Cummins Inc. Price, Consensus and EPS Surprise
Cummins Inc. price-consensus-eps-surprise-chart | Cummins Inc. Quote
Segmental Performance
Sales for the Engine segment declined 11% year over year at $2.4 billion. The segment’s EBITDA declined to $341 million (14.1% of sales) from $405 million (14.9% of sales) a year ago.
Sales for the Distribution segment grew 4% to $2 billion. The segment’s EBITDA rose to $186 million (9.3% of sales) from $155 million (8% of sales) a year ago.
Sales for the Components segment declined 6% to $1.7 billion. The segment’s EBITDA was $286 million (17.3% of sales) compared with the year-ago quarter figure of $288 million (16.4% of sales).
Sales for the Power Generation segment improved 2% to $1.1 billion. The segment’s EBITDA declined to $158 million (14% of sales) in third-quarter 2019 from $163 million (14.7% of sales) in the year-ago quarter.
Sales for the Electrified Power segment were $9 million. The segment witnessed EBITDA loss of $36 million.
Financial Position
Cummins’ cash and cash equivalents were $1.6 billion as of Sep 29, 2019, up from $1.3 billion as of Dec 31, 2018. Long-term debt totaled $1.62 billion as of Sep 29, 2019, compared with $1.60 as of Dec 31, 2018.
Outlook
For 2019, Cummins now projects revenue decline of 2%. Initially, it expected revenues to remain at the same level as 2018. The company revised projection downward on lower truck production in North America, India, Brazil and Europe, and a decline in demand in off-highway markets, including North America construction and global mining. EBITDA is now expected to be 15.9-16.3% (compared with previously mentioned 16.25-16.75%) on lower volume and the Hydrogenics acquisition. Further, the company anticipates returning 75% of operating cash flow to shareholders in forms of dividends and share repurchases.
Zacks Rank & Stocks to Consider
Cummins currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Auto-Tires-Trucks sector are BRP Inc (DOOO - Free Report) and Sonic Automotive, Inc (SAH - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), and Lithia Motors, Inc (LAD - Free Report) , carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BRP has an expected earnings growth rate of 18.4% for 2019.
Sonic Automotive has an estimated earnings growth rate of 37.8% for 2019.
Lithia Motors has an estimated earnings growth rate of 15.1% for 2019.
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The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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