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Cummins (CMI) to Report Q4 Earnings: What's in the Cards?
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Cummins Inc. (CMI - Free Report) is slated to release fourth-quarter 2020 results on Feb 4, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $2.74 per share on revenues of $5.18 billion.
The company delivered better-than-expected results in the last reported quarter on solid contribution from the Distribution, Engine and Components segments.
Over the trailing four quarters, Cummins beat estimates on all occasions, the average surprise being 57.3%. This is depicted in the graph below:
The Zacks Consensus Estimate for Cummins’ fourth-quarter earnings per share has been revised upward by five cents to $2.74 in the past 30 days. Moreover, this compares favorably with the year-ago quarter’s $2.56 per share. However, the Zacks Consensus Estimate for revenues suggests a year-over-year decline of 7.09%.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Cummins this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here as elaborated below.
Earnings ESP: Cummins has an Earnings ESP of -1%. This is because the Most Accurate Estimate is pegged three cents lower than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Sales of medium- and heavy-duty trucks are highly cyclic in nature and are under significant pressure due to the coronavirus crisis. Consequently, the fourth-quarter performance of Cummins, one of the largest engine producers in the world, might have been affected amid this dismal scenario. In fact, bleak contributions across all major segments of the company are likely to have dented its quarterly performance.
The Zacks Consensus Estimate for the Engine segment’s quarterly net sales is pegged at $2,069 million, lower than the year-ago period’s $2,284 million and the prior quarter’s $2,112 million. The EBITDA for the segment is estimated at $285 million, calling for a 25.4% drop sequentially.
For the December-end quarter, the Zacks Consensus Estimate for the Power System segment’s net sales is pinned at $1,023 million, lower than the year-earlier period’s $1,054 million. Further, the Components segment has a Zacks Consensus Estimate of $1,545 million for quarterly net sales, calling for a decline from the year-ago quarter’s $1,557 million.
The fourth-quarter sales estimate for the Distribution segment is pinned at $1,877 million, indicating a fall from the year-earlier quarter’s $2,038 million.
Nonetheless, the consensus mark for the New Power segment’s to-be-reported quarter net sales is pegged at $25.7 million, suggesting growth from the year-ago period as well as the prior-quarter figure of $18 million each. The segment’s EBITDA is pinned at a loss of $41.3 million, calling for a narrower loss from the prior-year quarter’s $51 million. This is likely to have aided the company’s top and bottom lines during the quarter under review.
Additionally, Cummins’ cost-containment efforts, including pay cuts, discretion spending reduction and employee retrenchment, are likely to have offered some respite to the company’s margins during the October-December period.
Stocks to Consider
Here are a few stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around:
BorgWarner (BWA - Free Report) has an Earnings ESP of +2.94% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Feb 11.
Allison Transmission Holdings (ALSN - Free Report) has an Earnings ESP of +7.44% and carries a Zacks Rank #3 at present. The company will announce fourth-quarter 2020 results on Feb 17.
Magna International (MGA - Free Report) has an Earnings ESP of +5.42% and currently flaunts a Zacks Rank of 1. The company is slated to release fourth-quarter numbers on Feb 19.
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Cummins (CMI) to Report Q4 Earnings: What's in the Cards?
Cummins Inc. (CMI - Free Report) is slated to release fourth-quarter 2020 results on Feb 4, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $2.74 per share on revenues of $5.18 billion.
The company delivered better-than-expected results in the last reported quarter on solid contribution from the Distribution, Engine and Components segments.
Over the trailing four quarters, Cummins beat estimates on all occasions, the average surprise being 57.3%. This is depicted in the graph below:
Cummins Inc. Price and EPS Surprise
Cummins Inc. price-eps-surprise | Cummins Inc. Quote
Trend in Estimate Revisions
The Zacks Consensus Estimate for Cummins’ fourth-quarter earnings per share has been revised upward by five cents to $2.74 in the past 30 days. Moreover, this compares favorably with the year-ago quarter’s $2.56 per share. However, the Zacks Consensus Estimate for revenues suggests a year-over-year decline of 7.09%.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Cummins this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here as elaborated below.
Earnings ESP: Cummins has an Earnings ESP of -1%. This is because the Most Accurate Estimate is pegged three cents lower than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cummins carries a Zacks Rank of 2 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Factors
Sales of medium- and heavy-duty trucks are highly cyclic in nature and are under significant pressure due to the coronavirus crisis. Consequently, the fourth-quarter performance of Cummins, one of the largest engine producers in the world, might have been affected amid this dismal scenario. In fact, bleak contributions across all major segments of the company are likely to have dented its quarterly performance.
The Zacks Consensus Estimate for the Engine segment’s quarterly net sales is pegged at $2,069 million, lower than the year-ago period’s $2,284 million and the prior quarter’s $2,112 million. The EBITDA for the segment is estimated at $285 million, calling for a 25.4% drop sequentially.
For the December-end quarter, the Zacks Consensus Estimate for the Power System segment’s net sales is pinned at $1,023 million, lower than the year-earlier period’s $1,054 million. Further, the Components segment has a Zacks Consensus Estimate of $1,545 million for quarterly net sales, calling for a decline from the year-ago quarter’s $1,557 million.
The fourth-quarter sales estimate for the Distribution segment is pinned at $1,877 million, indicating a fall from the year-earlier quarter’s $2,038 million.
Nonetheless, the consensus mark for the New Power segment’s to-be-reported quarter net sales is pegged at $25.7 million, suggesting growth from the year-ago period as well as the prior-quarter figure of $18 million each. The segment’s EBITDA is pinned at a loss of $41.3 million, calling for a narrower loss from the prior-year quarter’s $51 million. This is likely to have aided the company’s top and bottom lines during the quarter under review.
Additionally, Cummins’ cost-containment efforts, including pay cuts, discretion spending reduction and employee retrenchment, are likely to have offered some respite to the company’s margins during the October-December period.
Stocks to Consider
Here are a few stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around:
BorgWarner (BWA - Free Report) has an Earnings ESP of +2.94% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Feb 11.
Allison Transmission Holdings (ALSN - Free Report) has an Earnings ESP of +7.44% and carries a Zacks Rank #3 at present. The company will announce fourth-quarter 2020 results on Feb 17.
Magna International (MGA - Free Report) has an Earnings ESP of +5.42% and currently flaunts a Zacks Rank of 1. The company is slated to release fourth-quarter numbers on Feb 19.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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