On Dec 20, we downgraded
) to Underperform from Neutral. The downward revision was based
on the weakness in operating markets, especially India, high
competition and expectations of revenue decline.
CUMMINS INC (CMI): Free Stock Analysis Report
GENTEX CORP (GNTX): Free Stock Analysis
LEAR CORPORATN (LEA): Free Stock Analysis
TOWER INTL INC (TOWR): Free Stock Analysis
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Why the Downgrade?
On Oct 29, Cummins posted net earnings of $362 million or $1.94
per share (excluding special items) in the third quarter of 2013,
lagging the Zacks Consensus Estimate of $2.10 per share. However,
earnings increased from $336 million or $1.78 per share in the
comparable year-ago quarter.
Following the release of the third quarter results, the Zacks
Consensus Estimate for Cummins' 2013 earnings decreased 6.3% to
$7.57 per share. The Zacks Consensus Estimate for 2014 dropped
5.4% to $9.32 per share. Currently, Cummins retains a Zacks Rank
We are concerned about the weakness in operating markets, which
could mar the results of the company. Cummins is witnessing a
challenging situation mainly in India. Demand from India declined
by 25% in third-quarter 2013 due to weak industrial activity and
Moreover, Cummins operates under a highly competitive
environment. New technologies, including those developed for
gasoline, will provide further competition for the company.
In addition, Cummins now expects revenues to decline 3% from the
2012 level, against the earlier guidance of in-line results. The
company also slashed its 2013 EBIT margin guidance to 12.5%-13%
Other Stocks to Consider
Tower International, Inc.
), all with a Zacks Rank #1 (Strong Buy), are performing well in
the auto and truck industry.