Cummins (CMI) Earnings, Revenues Surpass Estimates In Q1

Cummins Inc. (NYSE:CMI) has reported earnings of $4.20 per share in first-quarter 2019, beating the Zacks Consensus Estimate of $3.51. In the year-ago quarter, it recorded earnings per share of $1.96.

During the reported quarter, net income attributable to Cummins was $663 million against net loss of $325 million in the prior-year quarter.

Revenues improved 8% year over year to $6 billion in the reported quarter. The top line surpassed the Zacks Consensus Estimate of $5.81 billion. This year-over-year rise was due to increased truck production in North America, and strong demand in global construction and North America power generation markets.

Cummins Inc. Price, Consensus and EPS Surprise

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $1 billion (17.2% of sales) from $700 million (12.6% of sales) recorded in the prior-year quarter.

Segmental Performance

Sales forthe Engine segment grew 8% to $2.7 billion on the back of 9% increase in on-highway revenues and 6% in off-highway revenues. The segment’s EBITDA increased to $438 million (16.5% of sales) from $286 million (11.7% of sales) a year ago.

Sales for the Distribution segment increased 8% to $2 billion. Revenues benefited from 10% rise in the North America segment and 4% growth in international markets. The segment’s EBITDA rose to $171 million (8.5% of sales) from $123 million (6.6% of sales) a year ago.

Sales for the Components segment improved 6% to $1.9 billion, owing to revenue growth of 17% in North America in addition to 8% increase in international sales. The segment’s EBITDA was $325 million (17.5% of sales) compared with the year-ago figure of $227 million (12.9% of sales).

Sales for the Power Generation segment were $1.1 billion. The segment’s EBITDA declined to $138 million (12.8% of sales) in first-quarter 2019 from $142 million (13.2% of sales) in the year-ago quarter.

Sales for the Electrified Power segment were $3 million, while the segment witnessed an EBITDA loss of $29 million.

Financial Position

Cummins’ cash and cash equivalents were $1.3 billion as of Mar 31, 2019, almost similar to the figure recorded on Mar 31, 2019. Long-term debt totaled $1.6 billion as of Dec 31, 2019, similar to Dec 31, 2018.

At the end of the first quarter, Cummins’ net operating cash inflow was $412 million against outflow of $117 million in the same period of 2018. Capital expenditure was $109 million, marking an increase from $72 million in first-quarter of 2018.

Guidance

For 2019, Cummins maintained the revenue projection at flat to up 4%. However, EBITDA is expected to be 16.25-16.75% as a percentage of sales compared with previously mentioned15.75-16%. 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 PACCAR, Inc. (NASDAQ:PCAR) , SPX Corp. (NYSE:SPXC) and AB Volvo (OTC:VLVLY) . PACCAR and SPX Corp. currently carry a Zacks Rank #2 (Buy) while Volvo sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PACCAR has an expected long-term growth rate of 8.4%. The company’s stock has seen the Zacks Consensus Estimate for earnings in 2019 being revised 0.16% upward over the past 30 days.

SPX Corp. has an expected current-year growth rate of 18.2%. The company’s stock has seen the Zacks Consensus Estimate for earnings in 2019 being revised 0.39% upward over the past 30 days.

Volvo has an expected long-term growth rate of 5%. The company’s stock has seen the Zacks Consensus Estimate for earnings in 2019 being revised 8.1% upward over the past 30 days.

Is Your Investment Advisor Fumbling Your Financial Future?

See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”

Click to get it free >>