Back to top

Image: Bigstock

Here's Why Cummins (CMI) is Poised for Q1 Earnings Beat

Read MoreHide Full Article

Cummins Inc. (CMI - Free Report) is slated to release first-quarter 2021 results on May 4, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $3.46 per share on revenues of $5.3 billion.

The company delivered better-than-expected results in the last reported quarter on higher-than-anticipated contributions from the Engine and Components Systems segments.

Over the trailing four quarters, Cummins beat estimates on all occasions, the average surprise being 61.51%. This is depicted in the graph below:

Cummins Inc. Price and EPS Surprise

Cummins Inc. Price and EPS Surprise

Cummins Inc. price-eps-surprise | Cummins Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for Cummins’ first-quarter earnings per share has been revised upward by a cent to $3.46 in the past seven days. Moreover, this compares favorably with the year-ago quarter’s $3.18 per share. Also, the Zacks Consensus Estimate for revenues suggests a year-over-year rise of 5.84%.

Earnings Whispers

Our proven model predicts 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 odds of an earnings beat.

Earnings ESP: Cummins has an Earnings ESP of +0.9%. This is because the Most Accurate Estimate of $3.49 per share comes in three cents higher 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

With the auto sector steadily recovering from the pandemic-induced disruptions, Cummins’ first-quarter top and bottom lines are likely to have benefited amid this upbeat scenario. In fact, robust revenues across all major segments of the company are likely to have boosted its quarterly performance.
 
Notably, the Zacks Consensus Estimate for the Engine segment’s quarterly net sales is pegged at $2,235 million, suggesting a jump from the year-ago period’s $2,158 million. For the March-end quarter, the Zacks Consensus Estimate for the Distribution segment’s net sales is pinned at $1,883 million, indicating an increase from the year-ago period’s $1,814 million. The EBITDA for the segment is estimated at $180 million, calling for a 13.9% rise on year-on-year basis.  

For the quarter under discussion, the Zacks Consensus Estimate for the Power System segment’s net sales is pinned at $920 million, suggesting a jump from the year-earlier period’s $884 million. Further, the Zacks Consensus Estimate of $1,725 million for the Components segment’s quarterly net sales calls for a rise from the year-ago quarter’s $1,502 million.

Also, the consensus mark for the New Power segment’s to-be-reported quarter net sales is pegged at $24.5 million, suggesting solid growth from the year-ago period figure of $10 million.

Additionally, Cummins’ efforts and investments to ramp up its capabilities in fuel cell and hydrogen production technology are likely to have buoyed the company’s margins during the January-March period.

Other Stocks to Consider

Here are a few other stocks worth considering, as these too have the right combination of elements to come up with an earnings beat this time around:

General Motors (GM - Free Report) has an Earnings ESP of +3.77% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on May 5.

American Axle & Manufacturing Holdings (AXL - Free Report) has an Earnings ESP of +0.53% and currently carries a Zacks Rank of 3. The company is slated to release earnings figures on May 7.

American Well Corporation (AMWL - Free Report) has an Earnings ESP of +9.44% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on May 12.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>