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Cummins (CMI) to Report in Q4 Earnings: What's in Store?
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Cummins Inc. (CMI - Free Report) is scheduled to report fourth-quarter and fiscal 2017 earnings numbers on Feb 6 before the market opens. Last quarter, the company delivered a positive surprise of 9.7%. In fact, the company beat estimates in three of the trailing four quarters and missed in one with an average beat of 12.4%.
In the last three months, shares of Cummins have outperformed the Auto sector. The stock has gained 8.5% compared with the sector’s growth of 7.8% during the period.
Let’s see, how things are shaping up for this announcement.
Our proven model does not conclusively show that Cummins is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Cummins has an Earnings ESP of 0.00% because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $2.64. 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 #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Factors Influencing This Quarter
Cummins has been facing higher variable compensation costs and selling, general and administrative expenses (S&GA), leading the company to opt for material cost-reduction programs. Last quarter, its S&GA expenses rose 22% from the prior-year period.
Also, Cummins’ dependence on a single supplier for its manufacturing parts might adversely impact its operations.
However, for 2017, Cummins issues a bullish outlook for revenues from different segments. The company anticipates the metric to grow 14-15% whereas Earnings before Interest and Taxes (EBIT) is expected within the 11.8-12.2% range.
Of the four segments, Components, Power Systems and Distribution are expected to witness revenue growth of 11-13%, driven by acquisitions and divestiture of power generation rental assets in North America and increased customer demand from mining and oil and gas engines. Whereas revenues in the Engine segment are expected to rise up to 12-14% in 2017, driven by an improved guidance for on-highway revenues.
For the soon-to-be-released quarterly results, the Zacks Consensus Estimate for net sales of Engine segment is pegged at $2.26 billion, down from the third quarter’s actual net sales of $2.34 billion.
Similarly, the consensus estimate for net sales at the company’s Distribution segment stands at $1.83 billion, up from the third quarter’s actual net sales of $1.75 billion.
The Zacks Consensus Estimate for net sales of Components segment stands at $1.5 billion, down from the third quarter’s actual net sales of $1.53 billion. While the same for net sales in the Power Generation segment is pegged at $1.01 billion, almost in line with the third quarter’s actual net sales of $1.05 billion.
Stocks to Consider
Here are a few stocks worth considering from the same space with the right combination of elements to deliver an earnings beat this time around:
Dana Incorporated (DAN - Free Report) has an Earnings ESP of +3.32% and a Zacks Rank of 2. The company’s fourth-quarter 2017 results are expected to be released on Feb 8.
Tenneco Inc. has an Earnings ESP of +1.52% and a Zacks Rank of 3. The company’s fourth-quarter 2017 results are slated to be announced on Feb 9.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Cummins (CMI) to Report in Q4 Earnings: What's in Store?
Cummins Inc. (CMI - Free Report) is scheduled to report fourth-quarter and fiscal 2017 earnings numbers on Feb 6 before the market opens. Last quarter, the company delivered a positive surprise of 9.7%. In fact, the company beat estimates in three of the trailing four quarters and missed in one with an average beat of 12.4%.
In the last three months, shares of Cummins have outperformed the Auto sector. The stock has gained 8.5% compared with the sector’s growth of 7.8% during the period.
Let’s see, how things are shaping up for this announcement.
Cummins Inc. Price and EPS Surprise
Cummins Inc. Price and EPS Surprise | Cummins Inc. Quote
Earnings Whispers
Our proven model does not conclusively show that Cummins is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Cummins has an Earnings ESP of 0.00% because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $2.64. 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 #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Factors Influencing This Quarter
Cummins has been facing higher variable compensation costs and selling, general and administrative expenses (S&GA), leading the company to opt for material cost-reduction programs. Last quarter, its S&GA expenses rose 22% from the prior-year period.
Also, Cummins’ dependence on a single supplier for its manufacturing parts might adversely impact its operations.
However, for 2017, Cummins issues a bullish outlook for revenues from different segments. The company anticipates the metric to grow 14-15% whereas Earnings before Interest and Taxes (EBIT) is expected within the 11.8-12.2% range.
Of the four segments, Components, Power Systems and Distribution are expected to witness revenue growth of 11-13%, driven by acquisitions and divestiture of power generation rental assets in North America and increased customer demand from mining and oil and gas engines. Whereas revenues in the Engine segment are expected to rise up to 12-14% in 2017, driven by an improved guidance for on-highway revenues.
For the soon-to-be-released quarterly results, the Zacks Consensus Estimate for net sales of Engine segment is pegged at $2.26 billion, down from the third quarter’s actual net sales of $2.34 billion.
Similarly, the consensus estimate for net sales at the company’s Distribution segment stands at $1.83 billion, up from the third quarter’s actual net sales of $1.75 billion.
The Zacks Consensus Estimate for net sales of Components segment stands at $1.5 billion, down from the third quarter’s actual net sales of $1.53 billion. While the same for net sales in the Power Generation segment is pegged at $1.01 billion, almost in line with the third quarter’s actual net sales of $1.05 billion.
Stocks to Consider
Here are a few stocks worth considering from the same space with the right combination of elements to deliver an earnings beat this time around:
Allison Transmission Holdings, Inc. (ALSN - Free Report) has an Earnings ESP of +10.40% and a Zacks Rank #2. The company is expected to report fourth-quarter 2017 results on Feb 14. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dana Incorporated (DAN - Free Report) has an Earnings ESP of +3.32% and a Zacks Rank of 2. The company’s fourth-quarter 2017 results are expected to be released on Feb 8.
Tenneco Inc. has an Earnings ESP of +1.52% and a Zacks Rank of 3. The company’s fourth-quarter 2017 results are slated to be announced on Feb 9.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>