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Cummins (CMI) Q4 Earnings Miss Estimates, Revenues Beat
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Cummins Inc. (CMI - Free Report) has reported adjusted earnings of $3.48 per share in fourth-quarter 2018, missing the Zacks Consensus Estimate of $3.82. In the year-ago quarter, it recorded adjusted earnings per share of $3.03.
During the reported quarter, net income attributable to Cummins was $579 million against net loss of $274 million in the prior-year quarter.
Revenues improved 12% year over year to $6.13 billion in the reported quarter. The top line surpassed the Zacks Consensus Estimate of $6.09 billion. The year-over-year rise was owing to increased truck production in North America, and strong demand for construction and power generation equipment across all markets.
Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $896 million (14.6% of sales) from $769 million (14% of sales) recorded in the prior-year quarter.
2018 Results
In 2018, Cummins reported net income of $2.1 billion or $13.15 per share, up from $999 million or $5.97 per share in the previous year.
Revenues for the year went up 16% year over year to $23.8 billion.
Segmental Performance
Sales at the Engine segment grew 18% to $2.7 billion on the back of 17% increase in on-highway revenues and 21% in off-highway revenues. The segment’s EBITDA increased to $393 million (14.6% of sales) from $271 million (11.8% of sales) a year ago.
Sales at the Distribution segment increased 6% to $2.1 billion. Revenues benefited from 6% rise in the North American segment and 5% growth in international markets. The segment’s EBITDA rose to $140 million (6.8% of sales) from $123 million (6.3% of sales) a year ago.
Sales at the Components segment surged 14% to $1.8 billion, owing to revenue growth of 23% in North America in addition to 3% increase in international sales. The segment’s EBITDA was $278 million (15.7% of sales) compared with the year-ago figure of $214 million (13.7% of sales).
Sales at the Power Generation segment improved 9% to $1.2 billion, banking on a 13% increase in power generation revenues. The segment’s EBITDA rose to $123 million (10.3% of sales) in fourth-quarter 2018 from $125 million (11.3% of sales) in the year-ago quarter.
Sales at the Electrified Power segment were $2 million while the segment witnessed EBITDA loss of $29 million.
Financial Position
Cummins’ cash and cash equivalents were $1.3 billion as of Dec 31, 2018, compared with $1.37 billion as of Dec 31, 2017. Long-term debt totaled $1.6 billion as of Dec 31, 2018, almost similar to figures recorded as of Dec 31, 2017.
At the end of 2018, Cummins’ net operating cash inflow was $2.4 billion compared with $2.3 billion in the same period of 2017. Capital expenditure was $709 million, marking an increase from $506 million in 2017.
Capital Deployment
During 2018, Cummins returned $1.9 billion or 78% of operating cash flow to shareholders in forms of dividends and share buybacks. In the last year, it invested $1.14 billion to repurchase shares and $718 million to pay dividends.
Guidance
For 2019, Cummins projects revenues to be flat to up 4%. Moreover, EBITDA is expected to be 15.75-16% as a percentage of sales. Further, the company anticipates returning 75% of operating cash flow to shareholders in forms of dividends and share repurchases.
General Motors has an expected long-term growth rate of 8.5%. Share price of the company has increased 4.5% in the past six months.
Cooper Tire has an expected long-term growth rate of 4%. Over the past six months, shares of the company have gained 13.7%.
Genuine Parts has an expected long-term growth rate of 5%. Shares of the company have gained 4.2% in the past six months.
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Cummins (CMI) Q4 Earnings Miss Estimates, Revenues Beat
Cummins Inc. (CMI - Free Report) has reported adjusted earnings of $3.48 per share in fourth-quarter 2018, missing the Zacks Consensus Estimate of $3.82. In the year-ago quarter, it recorded adjusted earnings per share of $3.03.
During the reported quarter, net income attributable to Cummins was $579 million against net loss of $274 million in the prior-year quarter.
Revenues improved 12% year over year to $6.13 billion in the reported quarter. The top line surpassed the Zacks Consensus Estimate of $6.09 billion. The year-over-year rise was owing to increased truck production in North America, and strong demand for construction and power generation equipment across all markets.
Cummins Inc. Price, Consensus and EPS Surprise
Cummins Inc. Price, Consensus and EPS Surprise | Cummins Inc. Quote
Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $896 million (14.6% of sales) from $769 million (14% of sales) recorded in the prior-year quarter.
2018 Results
In 2018, Cummins reported net income of $2.1 billion or $13.15 per share, up from $999 million or $5.97 per share in the previous year.
Revenues for the year went up 16% year over year to $23.8 billion.
Segmental Performance
Sales at the Engine segment grew 18% to $2.7 billion on the back of 17% increase in on-highway revenues and 21% in off-highway revenues. The segment’s EBITDA increased to $393 million (14.6% of sales) from $271 million (11.8% of sales) a year ago.
Sales at the Distribution segment increased 6% to $2.1 billion. Revenues benefited from 6% rise in the North American segment and 5% growth in international markets. The segment’s EBITDA rose to $140 million (6.8% of sales) from $123 million (6.3% of sales) a year ago.
Sales at the Components segment surged 14% to $1.8 billion, owing to revenue growth of 23% in North America in addition to 3% increase in international sales. The segment’s EBITDA was $278 million (15.7% of sales) compared with the year-ago figure of $214 million (13.7% of sales).
Sales at the Power Generation segment improved 9% to $1.2 billion, banking on a 13% increase in power generation revenues. The segment’s EBITDA rose to $123 million (10.3% of sales) in fourth-quarter 2018 from $125 million (11.3% of sales) in the year-ago quarter.
Sales at the Electrified Power segment were $2 million while the segment witnessed EBITDA loss of $29 million.
Financial Position
Cummins’ cash and cash equivalents were $1.3 billion as of Dec 31, 2018, compared with $1.37 billion as of Dec 31, 2017. Long-term debt totaled $1.6 billion as of Dec 31, 2018, almost similar to figures recorded as of Dec 31, 2017.
At the end of 2018, Cummins’ net operating cash inflow was $2.4 billion compared with $2.3 billion in the same period of 2017. Capital expenditure was $709 million, marking an increase from $506 million in 2017.
Capital Deployment
During 2018, Cummins returned $1.9 billion or 78% of operating cash flow to shareholders in forms of dividends and share buybacks. In the last year, it invested $1.14 billion to repurchase shares and $718 million to pay dividends.
Guidance
For 2019, Cummins projects revenues to be flat to up 4%. Moreover, EBITDA is expected to be 15.75-16% as a percentage of sales. Further, the company anticipates returning 75% of operating cash flow to shareholders in forms of dividends and share repurchases.
Zacks Rank & Stocks to Consider
Cummins currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader auto sector are General Motors Company (GM - Free Report) , Cooper Tire & Rubber Company , and Genuine Parts Company (GPC - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
General Motors has an expected long-term growth rate of 8.5%. Share price of the company has increased 4.5% in the past six months.
Cooper Tire has an expected long-term growth rate of 4%. Over the past six months, shares of the company have gained 13.7%.
Genuine Parts has an expected long-term growth rate of 5%. Shares of the company have gained 4.2% in the past six months.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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