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Cummins (CMI) Up 3.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Cummins (CMI - Free Report) . Shares have added about 3.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cummins due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cummins Q1 Earnings & Sales Decline Y/Y
Cummins reported earnings of $3.18 per share in first-quarter 2020, surpassing the Zacks Consensus Estimate of $2.18. Higher-than-expected contribution from Components and Engine segments led to the outperformance. EBITDA from the said segments came in at $279 million and $365 million, topping the consensus mark of $208 million and $243 million, respectively.
The bottom line, however, declined from earnings of $4.20 a share recorded in first-quarter 2019. Cummins’ revenues also declined 16.7% year over year to $5,011 million in the reported quarter. However, revenues beat the Zacks Consensus Estimate of $4,946 million.
Segmental Performance
Sales for the Engine segment declined 19% year over year to $2,158 million. The segment’s EBITDA (excluding restricting actions) declined to $365 million (16.9% of sales) from $438 million (16.5% of sales) a year ago. Decline in global demand in truck and construction markets resulted in lower on- and off-highway revenues than the prior-year quarter.
Sales for the Distribution segment totaled $1,814 million, down 9% year over year. Revenues from North America declined 11% and international sales were down 6% from the year-ago quarter. The segment’s EBITDA fell to $158 million (8.7% of sales) from $171 million (8.5% of sales) a year ago.
Sales for the Components segment declined 19% from the prior-year quarter to $1,502 million. The segment’s EBITDA was $279 million (18.6% of sales) compared with the year-ago figure of $325 million (17.5% of sales). Sales in North America and international markets declined 24% and 12% year over year, respectively.
Sales for the Power Systems segment declined 18% from the year-ago quarter to $884 million. The segment’s EBITDA declined to $77 million (8.7% of sales) in first-quarter 2020 from $138 million (12.8% of sales) in the year-ago period. Power generation and industrial revenues fell 8% and 30%, respectively, from a year ago.
Sales for the New Power segment were $10 million. The segment recorded EBITDA loss of $43 million.
Financial Position & Outlook
Cummins’ cash and cash equivalents were $1,691 million as of Mar 29, 2019, up from $1,129 million on Dec 31, 2019. Long-term debt totaled $1,580 million.
Amid coronavirus-led uncertainty, Cummins scrapped its annual view. The company anticipates second-quarter results to take a severe hit due to disruptions across customer and supplier operations, and lower end-market demand. In a bid to conserve cash, Cummins is implementing various cost-cut initiatives including temporary reduction in salaries. The company targets 2020 capex to decline 25% from 2019 levels.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.55% due to these changes.
VGM Scores
At this time, Cummins has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cummins has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Cummins (CMI) Up 3.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Cummins (CMI - Free Report) . Shares have added about 3.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cummins due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cummins Q1 Earnings & Sales Decline Y/Y
Cummins reported earnings of $3.18 per share in first-quarter 2020, surpassing the Zacks Consensus Estimate of $2.18. Higher-than-expected contribution from Components and Engine segments led to the outperformance. EBITDA from the said segments came in at $279 million and $365 million, topping the consensus mark of $208 million and $243 million, respectively.
The bottom line, however, declined from earnings of $4.20 a share recorded in first-quarter 2019. Cummins’ revenues also declined 16.7% year over year to $5,011 million in the reported quarter. However, revenues beat the Zacks Consensus Estimate of $4,946 million.
Segmental Performance
Sales for the Engine segment declined 19% year over year to $2,158 million. The segment’s EBITDA (excluding restricting actions) declined to $365 million (16.9% of sales) from $438 million (16.5% of sales) a year ago. Decline in global demand in truck and construction markets resulted in lower on- and off-highway revenues than the prior-year quarter.
Sales for the Distribution segment totaled $1,814 million, down 9% year over year. Revenues from North America declined 11% and international sales were down 6% from the year-ago quarter. The segment’s EBITDA fell to $158 million (8.7% of sales) from $171 million (8.5% of sales) a year ago.
Sales for the Components segment declined 19% from the prior-year quarter to $1,502 million. The segment’s EBITDA was $279 million (18.6% of sales) compared with the year-ago figure of $325 million (17.5% of sales). Sales in North America and international markets declined 24% and 12% year over year, respectively.
Sales for the Power Systems segment declined 18% from the year-ago quarter to $884 million. The segment’s EBITDA declined to $77 million (8.7% of sales) in first-quarter 2020 from $138 million (12.8% of sales) in the year-ago period. Power generation and industrial revenues fell 8% and 30%, respectively, from a year ago.
Sales for the New Power segment were $10 million. The segment recorded EBITDA loss of $43 million.
Financial Position & Outlook
Cummins’ cash and cash equivalents were $1,691 million as of Mar 29, 2019, up from $1,129 million on Dec 31, 2019. Long-term debt totaled $1,580 million.
Amid coronavirus-led uncertainty, Cummins scrapped its annual view. The company anticipates second-quarter results to take a severe hit due to disruptions across customer and supplier operations, and lower end-market demand. In a bid to conserve cash, Cummins is implementing various cost-cut initiatives including temporary reduction in salaries. The company targets 2020 capex to decline 25% from 2019 levels.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.55% due to these changes.
VGM Scores
At this time, Cummins has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cummins has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.