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A Peek Into Key Predictions Ahead of Cummins (CMI) Q4 Earnings
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Cummins Inc. (CMI - Free Report) is slated to release fourth-quarter 2022 results on Feb 6, before market open. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $4.66 and $7.36 billion, respectively.
For the fourth quarter, the consensus estimate for CMI’s earnings per share has moved down by 32 cents in the past 30 days. Its bottom-line estimates, however, imply a rise of 64% from the year-ago reported number. The Zacks Consensus Estimate for its quarterly revenues suggests a year-over-year increase of 26%. Over the trailing four quarters, CMI surpassed earnings estimates on two occasions and missed twice, with the average negative surprise being 4.69%. This is depicted in the graph below:
In third-quarter 2022, CMI’s adjusted earnings per share of $3.21 declined from $3.69 in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $4.88. Weaker-than-expected EBITDA in the Engine, Distribution, Components and New Power segments resulted in the underperformance. Cummins’ revenues totaled $7,333 million, up 22.8% from $5,968 million recorded in the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $6,958.2 million.
Factors to Shape Q4 Results
The acquisition of Meritor provided Cummins a strong footing as it brought forth lucrative growth opportunities across its range of power solutions and applications. While this is expected to boost the upcoming results, near-term challenges might have offset the same partially.
On its last earnings call, Cummins acknowledged that the global microchip deficit posed challenges for the firm and that it doesn’t expect the supply chain constraints to go away anytime soon. The supply base is tight not just for semiconductors but also for other components and this is likely to have weighed on the company’s near-term performance. Further, labor shortages, logistical bottlenecks, elevated freight and transportation costs are expected to have put pressure on the firm’s margins.
Also, a boost to its capabilities in fuel cell and hydrogen production technology has made R&D and SG&A expenses spiral. Additionally, the company’s New Power segment is suffering from continuous losses amid high product and technology-related expenses for the past several quarters. The trend is likely to have continued in the to-be-reported quarter, hurting margins.
Here’s a brief look at the revenue and EBITDA estimates for Cummins’ segments.
The Zacks Consensus Estimate for quarterly sales of the Engine segment is pegged at $2,660 million, suggesting a decline from $2,779 million reported in the third-quarter of 2022. However, the consensus mark for the segment’s EBITDA is $432 million, implying an increase from $363 recorded in the previous quarter.
For the fourth quarter, the Zacks Consensus Estimate for sales from the Distribution segment is $2,092 million, indicating a decline of 6.5% sequentially. The consensus mark for the segment’s EBITDA is $225 million, in line with the level reported in the third quarter of 2022.
For the quarter under discussion, the Zacks Consensus Estimate for net sales from the Power System segment is $1,154 million, suggesting a fall from $1,349 million recorded in third-quarter 2022. The consensus mark for the segment’s EBITDA is $127 million, implying a contraction from $193 million generated in the previous quarter.
The Zacks Consensus Estimate of $3,058 million for the Components segment’s quarterly net sales implies an increase from the last reported quarter’s $2,703 million. The consensus estimate for the segment’s EBITDA is pegged at $421 million, indicating a rise from $297 million recorded in third-quarter 2022.
For the New Power segment, the consensus estimate for revenues is $62 million, indicating a rise from $50 million recorded in the last reported quarter. The consensus mark for pretax loss from the segment is pegged at $78 million.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Cummins for the quarter to be reported, as it does not have the right combination of the two key ingredients. A 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: CMI has an Earnings ESP of -5.66%. This is because the Most Accurate Estimate is pegged 26 cents lower than the Zacks Consensus Estimate.
Zacks Rank: It currently carries a Zacks Rank of 4 (Sell).
While an earnings beat is uncertain for Cummins, here are a few stocks from the auto space, which, according to our model, have the right combination of elements to post an earnings beat.
Adient plc (ADNT - Free Report) will release fiscal first-quarter 2023 results on Feb 7. The company has an Earnings ESP of +6.61% and a Zacks Rank #3.
The Zacks Consensus Estimate for Adient’s to-be-reported quarter’s earnings and revenues is pegged at 40 cents per share and $3.72 billion, respectively. ADNT surpassed earnings estimates in two of the trailing four quarters, with the average negative surprise being 205.3%.
Allison Transmission (ALSN - Free Report) will release fourth-quarter 2022 results on Feb 15. The company has an Earnings ESP of +3.06% and a Zacks Rank #3.
The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.21 per share and $676 million, respectively. ALSN surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 10.3%.
Lucid Group (LCID - Free Report) will release fourth-quarter 2022 results on Feb 22. The company has an Earnings ESP of +3.90% and a Zacks Rank #2.
The Zacks Consensus Estimate for Lucid’s to-be-reported quarter’s loss per share and revenues is pegged at 39 cents per share and $290 million, respectively. LCID surpassed earnings estimates in two of the trailing four quarters for as many misses, with the average surprise being 11.2%.
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A Peek Into Key Predictions Ahead of Cummins (CMI) Q4 Earnings
Cummins Inc. (CMI - Free Report) is slated to release fourth-quarter 2022 results on Feb 6, before market open. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $4.66 and $7.36 billion, respectively.
For the fourth quarter, the consensus estimate for CMI’s earnings per share has moved down by 32 cents in the past 30 days. Its bottom-line estimates, however, imply a rise of 64% from the year-ago reported number. The Zacks Consensus Estimate for its quarterly revenues suggests a year-over-year increase of 26%. Over the trailing four quarters, CMI surpassed earnings estimates on two occasions and missed twice, with the average negative surprise being 4.69%. This is depicted in the graph below:
Cummins Inc. Price and EPS Surprise
Cummins Inc. price-eps-surprise | Cummins Inc. Quote
Q3 Highlights
In third-quarter 2022, CMI’s adjusted earnings per share of $3.21 declined from $3.69 in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $4.88. Weaker-than-expected EBITDA in the Engine, Distribution, Components and New Power segments resulted in the underperformance. Cummins’ revenues totaled $7,333 million, up 22.8% from $5,968 million recorded in the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $6,958.2 million.
Factors to Shape Q4 Results
The acquisition of Meritor provided Cummins a strong footing as it brought forth lucrative growth opportunities across its range of power solutions and applications. While this is expected to boost the upcoming results, near-term challenges might have offset the same partially.
On its last earnings call, Cummins acknowledged that the global microchip deficit posed challenges for the firm and that it doesn’t expect the supply chain constraints to go away anytime soon. The supply base is tight not just for semiconductors but also for other components and this is likely to have weighed on the company’s near-term performance. Further, labor shortages, logistical bottlenecks, elevated freight and transportation costs are expected to have put pressure on the firm’s margins.
Also, a boost to its capabilities in fuel cell and hydrogen production technology has made R&D and SG&A expenses spiral. Additionally, the company’s New Power segment is suffering from continuous losses amid high product and technology-related expenses for the past several quarters. The trend is likely to have continued in the to-be-reported quarter, hurting margins.
Here’s a brief look at the revenue and EBITDA estimates for Cummins’ segments.
The Zacks Consensus Estimate for quarterly sales of the Engine segment is pegged at $2,660 million, suggesting a decline from $2,779 million reported in the third-quarter of 2022. However, the consensus mark for the segment’s EBITDA is $432 million, implying an increase from $363 recorded in the previous quarter.
For the fourth quarter, the Zacks Consensus Estimate for sales from the Distribution segment is $2,092 million, indicating a decline of 6.5% sequentially. The consensus mark for the segment’s EBITDA is $225 million, in line with the level reported in the third quarter of 2022.
For the quarter under discussion, the Zacks Consensus Estimate for net sales from the Power System segment is $1,154 million, suggesting a fall from $1,349 million recorded in third-quarter 2022. The consensus mark for the segment’s EBITDA is $127 million, implying a contraction from $193 million generated in the previous quarter.
The Zacks Consensus Estimate of $3,058 million for the Components segment’s quarterly net sales implies an increase from the last reported quarter’s $2,703 million. The consensus estimate for the segment’s EBITDA is pegged at $421 million, indicating a rise from $297 million recorded in third-quarter 2022.
For the New Power segment, the consensus estimate for revenues is $62 million, indicating a rise from $50 million recorded in the last reported quarter. The consensus mark for pretax loss from the segment is pegged at $78 million.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Cummins for the quarter to be reported, as it does not have the right combination of the two key ingredients. A 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: CMI has an Earnings ESP of -5.66%. This is because the Most Accurate Estimate is pegged 26 cents lower than the Zacks Consensus Estimate.
Zacks Rank: It currently carries a Zacks Rank of 4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With the Favorable Combination
While an earnings beat is uncertain for Cummins, here are a few stocks from the auto space, which, according to our model, have the right combination of elements to post an earnings beat.
Adient plc (ADNT - Free Report) will release fiscal first-quarter 2023 results on Feb 7. The company has an Earnings ESP of +6.61% and a Zacks Rank #3.
The Zacks Consensus Estimate for Adient’s to-be-reported quarter’s earnings and revenues is pegged at 40 cents per share and $3.72 billion, respectively. ADNT surpassed earnings estimates in two of the trailing four quarters, with the average negative surprise being 205.3%.
Allison Transmission (ALSN - Free Report) will release fourth-quarter 2022 results on Feb 15. The company has an Earnings ESP of +3.06% and a Zacks Rank #3.
The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.21 per share and $676 million, respectively. ALSN surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 10.3%.
Lucid Group (LCID - Free Report) will release fourth-quarter 2022 results on Feb 22. The company has an Earnings ESP of +3.90% and a Zacks Rank #2.
The Zacks Consensus Estimate for Lucid’s to-be-reported quarter’s loss per share and revenues is pegged at 39 cents per share and $290 million, respectively. LCID surpassed earnings estimates in two of the trailing four quarters for as many misses, with the average surprise being 11.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.