Markets

Cummins (CMI) Q2 Earnings & Sales Top Estimates, Decline Y/Y

Cummins Inc. CMI reported second-quarter 2020 earnings of $1.95 per share, which surpassed the Zacks Consensus Estimate of $0.85. Higher-than-expected contribution from Distribution, Engine and Power Systems segments led to the outperformance. EBITDA from the said segments came in at $160 million, $150 million and $91 million, which topped the consensus mark of $101 million, $85 million and $76 million, respectively.

The bottom line, however, declined from second-quarter 2019 earnings of $4.27 a share amid coronavirus woes. Cummins’ revenues also declined 38% year over year to $3,852 million. However, revenues beat the Zacks Consensus Estimate of $3,569 million.

Cummins Inc. Price, Consensus and EPS Surprise

Cummins Inc. Price, Consensus and EPS Surprise

Cummins Inc. price-consensus-eps-surprise-chart | Cummins Inc. Quote

Key Takeaways

Sales for the Engine segment declined 47.3% year over year to $1,423 million. The segment’s EBITDA declined to $150 million (accounting for 10.5% of sales) from $416 million (15.4% 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 slid in all regions served, apart from China.

Sales for the Distribution segment totaled $1,605 million, down 20.8% year over year. Revenues from North America declined 25% and international sales were down 12% from the year-ago quarter. The segment’s EBITDA fell to $160 million (10% of sales) from $172 million (8.5% of sales) a year ago amid lower demand and unfavorable forex translations.

Sales for the Components segment declined 37.7% from the prior-year quarter to $1,150 million. The segment’s EBITDA was $141 million (12.3% of sales) compared with the year-ago figure of $297 million (16.1% of sales). Sales in North America and international markets declined 55% and 9% year over year, respectively. Weak demand in Brazil, Europe and India weighed on international sales. Nonetheless, sales surged 63% year over year in China on the back of record level of truck production.

Sales for the Power Systems segment declined 35.4% from the year-ago quarter to $777 million. The segment’s second-quarter 2020 EBITDA declined to $91 million (11.7% of sales) from $173 million (14.4% of sales) in the year-ago period. Power generation and industrial revenues fell 37% and 33%, respectively, from a year ago. Lower demand in mining and oil/gas markets weighed on the segment’s sales.

Sales for the New Power segment were $10 million. The segment recorded EBITDA of negative $38 million amid high product and technology-related expenses. 

Cummins’ cash and cash equivalents were $1,751 million as of Jun 28, 2020, up from $1,129 million on Dec 31, 2019. Long-term debt totaled $1,639 million, up from $1,576 million on Dec 31, 2019.

While the firm expects third-quarter sales to improve sequentially, coronavirus-led uncertainty still looms large. On account of this, Cummins refrained from providing any forecast for full-year 2020.

Zacks Rank & Stocks to Consider

Cummins currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto sector include Sonic Automotive Inc. SAH, Lithia Motors LAD and AutoNation AN, each carrying a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>


Click to get this free report

Cummins Inc. (CMI): Free Stock Analysis Report

AutoNation, Inc. (AN): Free Stock Analysis Report

Sonic Automotive, Inc. (SAH): Free Stock Analysis Report

Lithia Motors, Inc. (LAD): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More