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Cummins (CMI) Stock Sinks As Market Gains: What You Should Know

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In the latest trading session, Cummins (CMI - Free Report) closed at $218.10, marking a -0.67% move from the previous day. This move lagged the S&P 500's daily gain of 0.96%. Elsewhere, the Dow gained 0.61%, while the tech-heavy Nasdaq lost 0.04%.

Coming into today, shares of the engine maker had lost 7.08% in the past month. In that same time, the Auto-Tires-Trucks sector lost 3.1%, while the S&P 500 lost 0.21%.

Cummins will be looking to display strength as it nears its next earnings release. In that report, analysts expect Cummins to post earnings of $3.14 per share. This would mark a year-over-year decline of 6.55%. Our most recent consensus estimate is calling for quarterly revenue of $5.8 billion, down 0.47% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $15.31 per share and revenue of $23.93 billion, which would represent changes of +27.48% and +20.81%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Cummins. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.03% lower. Cummins is holding a Zacks Rank of #4 (Sell) right now.

In terms of valuation, Cummins is currently trading at a Forward P/E ratio of 14.35. Its industry sports an average Forward P/E of 13.18, so we one might conclude that Cummins is trading at a premium comparatively.

We can also see that CMI currently has a PEG ratio of 1.28. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Automotive - Internal Combustion Engines was holding an average PEG ratio of 1.28 at yesterday's closing price.

The Automotive - Internal Combustion Engines industry is part of the Auto-Tires-Trucks sector. This group has a Zacks Industry Rank of 248, putting it in the bottom 3% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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