On Apr 3, 2014, we issued an updated research report on
Cummins posted earnings per share of $1.94 (excluding special
items) in the fourth quarter of 2013, compared with $1.93
reported in the year-ago quarter. However, earnings lagged the
Zacks Consensus Estimate of $1.98 per share.
Revenues in the quarter rose 6.9% year over year to $4.6
billion, mainly driven by higher revenues in North America, China
and Brazil, partially offset by poor sales in Mexico, India and
Australia. Revenues surpassed the Zacks Consensus Estimate of
Cummins expects to achieve revenues in the range of $25-$31
billion by 2018. The company also projects earnings before
interest and taxes (EBIT) to be in a range of 16-18% by 2018.
For 2014, Cummins expects revenues to increase 4% to 8% due to
the impact of acquisitions, higher market share in the North
American medium duty truck and bus markets, higher demand in the
North American heavy duty truck market and increased content in
European truck markets related to Euro 6 emission regulations.
Cummins also anticipates that earnings will increase at a faster
pace than revenues.
Moreover, Cummins is positioned to benefit from its innovative
products.However, weakness in operating markets and high
competition are downsides.The company is witnessing a challenging
situation in India, Australia, Mexico and Europe, which led to a
4% decline in international revenues in 2013.
Cummins currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Some stocks that are performing well in the sector include
Allison Transmission Holdings, Inc.
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