On Feb 12, we upgraded
) to Neutral based on its opportunities from fuel economy
improvements, new emission standards and increased prices.
Further, the upgrade was based on the company's focus on engine
division where it invested heavily for capacity expansion and new
CUMMINS INC (CMI): Free Stock Analysis Report
COMML VEHICLE (CVGI): Free Stock Analysis
OSHKOSH CORP (OSK): Free Stock Analysis
STRATTEC SEC CP (STRT): Free Stock Analysis
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Why the Upgrade?
Despite reporting a 21.9% fall in earnings per share to $2.00 in
the fourth quarter of 2012, Cummins' EPS exceeded the Zacks
Consensus Estimate by a considerable margin of 26 cents.
Revenues of $4.3 billion also exceeded the Zacks Consensus
Estimate of $4.1 billion during the quarter. However, it fell 13%
driven by weaker demand in truck, construction, and oil and gas
markets in North America as well as in international markets for
power generation equipments, and construction, truck and mining
Following the release of the fourth quarter results, the Zacks
Consensus Estimate for 2013 decreased 2.4% to $8.76 per share.
Meanwhile, the Zacks Consensus Estimate for 2014 fell 2.5% to
$10.00 per share. The company retains a Zacks Rank #3 (Hold).
Cummins will benefit from new emission standards, fuel economy
improvement with light-duty diesel penetration and favorable
trends for its Power Generation business with increased demand
for electricity against either aging or insufficient grid
In addition, the company has taken initiative to consolidate its
position in the engine division. Cummins has invested to
expand its capacity. The company has also introduced new products
including light-duty engines in the U.S. and China.
However, weak construction market had adverse impact on Cummin's
heavy- and medium-duty trucks, which constitutes 50% of the
Other Stocks to Consider
Commercial Vehicle Group Inc.
) with Zacks Rank #1 (Strong Buy) are performing well in the same
industry where Cummins operates.