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Cummins (CMI) Earnings and Revenues Miss Estimates in Q2
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Cummins Inc. (CMI - Free Report) has reported earnings of $4.27 per share in second-quarter 2019, missing the Zacks Consensus Estimate of $4.38.
During the reported quarter, net income attributable to the company was $675 million in comparison to net income of $545 million in the prior-year quarter.
Revenues improved 1% year over year to $6.2 billion in the reported quarter. However, the company’s revenues missed the Zacks Consensus Estimate of $6.36 billion. This year-over-year rise was due to increased truck production in North America and strong demand in North America power generation markets, which were partly offset by lower demand in oil and gas, and international truck markets.
Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $1.1 billion (17% of sales) from $897 million (14.6% of sales) recorded in the prior-year quarter.
Sales for the Engine segment were flat year over year at $2.7 billion. The segment’s EBITDA increased to $416 million (15.4% of sales) from $362 million (13.4% of sales) a year ago.
Sales for the Distribution segment increased 2% to $2 billion. The segment’s EBITDA rose to $172 million (8.5% of sales) from $145 million (7.3% of sales) a year ago.
Sales for the Components segment declined 2% to $1.8 billion. The segment’s EBITDA was $297 million (16.1% of sales) compared with the year-ago figure of $237 million (12.6% of sales).
Sales for the Power Generation segment were $1.2 billion. The segment’s EBITDA declined to $173 million (14.4% of sales) in second-quarter 2019 from $186 million (14.9% of sales) in the year-ago quarter.
Sales for the Electrified Power segment were $8 million while it witnessed EBITDA loss of $33 million.
Financial Position
Cummins’ cash and cash equivalents were $1.4 billion as of Jun 30, 2019, up from $1.3 billion as of Dec 31, 2018. Long-term debt totaled $1.62 billion as of Jun 30, 2019, in comparison to $1.60 as of Dec 31, 2018.
In the six months ending Jun 30, 2019, capital expenditure was $242 million, marking an increase from $186 million in the six months ending Jul 1, 2018.
Guidance
For 2019, Cummins projects revenues to be in the low end of the previously mentioned range of flat to 4%. However, EBITDA is expected to be 16.25-16.75%, similar to that mentioned previously. Further, the company anticipates returning 75% of operating cash flow to shareholders in forms of dividends and share repurchases.
Copart has an expected long-term growth rate of 20%. In the past year, shares of the company have rallied 39.3%.
CarMax has an expected long-term growth rate of 12.6%. In the past year, shares of the company have moved up 21.6%.
Gentex has an expected long-term growth rate of 5%. In the past year, shares of the company have returned 18.5%.
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Cummins (CMI) Earnings and Revenues Miss Estimates in Q2
Cummins Inc. (CMI - Free Report) has reported earnings of $4.27 per share in second-quarter 2019, missing the Zacks Consensus Estimate of $4.38.
During the reported quarter, net income attributable to the company was $675 million in comparison to net income of $545 million in the prior-year quarter.
Revenues improved 1% year over year to $6.2 billion in the reported quarter. However, the company’s revenues missed the Zacks Consensus Estimate of $6.36 billion. This year-over-year rise was due to increased truck production in North America and strong demand in North America power generation markets, which were partly offset by lower demand in oil and gas, and international truck markets.
Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $1.1 billion (17% of sales) from $897 million (14.6% of sales) recorded in the prior-year quarter.
Cummins Inc. Price, Consensus and EPS Surprise
Cummins Inc. price-consensus-eps-surprise-chart | Cummins Inc. Quote
Segmental Performance
Sales for the Engine segment were flat year over year at $2.7 billion. The segment’s EBITDA increased to $416 million (15.4% of sales) from $362 million (13.4% of sales) a year ago.
Sales for the Distribution segment increased 2% to $2 billion. The segment’s EBITDA rose to $172 million (8.5% of sales) from $145 million (7.3% of sales) a year ago.
Sales for the Components segment declined 2% to $1.8 billion. The segment’s EBITDA was $297 million (16.1% of sales) compared with the year-ago figure of $237 million (12.6% of sales).
Sales for the Power Generation segment were $1.2 billion. The segment’s EBITDA declined to $173 million (14.4% of sales) in second-quarter 2019 from $186 million (14.9% of sales) in the year-ago quarter.
Sales for the Electrified Power segment were $8 million while it witnessed EBITDA loss of $33 million.
Financial Position
Cummins’ cash and cash equivalents were $1.4 billion as of Jun 30, 2019, up from $1.3 billion as of Dec 31, 2018. Long-term debt totaled $1.62 billion as of Jun 30, 2019, in comparison to $1.60 as of Dec 31, 2018.
In the six months ending Jun 30, 2019, capital expenditure was $242 million, marking an increase from $186 million in the six months ending Jul 1, 2018.
Guidance
For 2019, Cummins projects revenues to be in the low end of the previously mentioned range of flat to 4%. However, EBITDA is expected to be 16.25-16.75%, similar to that mentioned previously. 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 auto space are Copart, Inc. (CPRT - Free Report) , CarMax, Inc. (KMX - Free Report) and Gentex Corporation (GNTX - Free Report) . While Copart currently sports a Zacks Rank #1 (Strong Buy), CarMax and Gentex carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Copart has an expected long-term growth rate of 20%. In the past year, shares of the company have rallied 39.3%.
CarMax has an expected long-term growth rate of 12.6%. In the past year, shares of the company have moved up 21.6%.
Gentex has an expected long-term growth rate of 5%. In the past year, shares of the company have returned 18.5%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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