Cummins' (CMI) Q3 Earnings & Sales Top Estimates, Down Y/Y
Cummins Inc. CMI reported third-quarter 2020 earnings of $3.57 per share, which surpassed the Zacks Consensus Estimate of $2.41. Higher-than-expected contribution from Distribution, Engine and Components Systems segments led to the outperformance. EBITDA from the said segments came in at $182 million, $382 million and $261 million, which topped the consensus mark of $175 million, $241 million and $176 million, respectively.
The bottom line, however, declined from third-quarter 2019 earnings of $3.83 a share amid coronavirus woes. Cummins’ revenues also declined 11.3% year over year to $5,118 million. However, revenues beat the Zacks Consensus Estimate of $4,473.1 million.
Cummins Inc. Price, Consensus and EPS Surprise
Sales for the Engine segment declined 13% year over year to $2,112 million. The segment’s EBITDA rose to $382 million (accounting for 18.1% of sales) from $341 million (14.1% 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 $1,721 million, down 14% year over year. Revenues from North America declined 18% and international sales were down 5% from the year-ago quarter. The segment’s EBITDA came in at $182 million (10.6% of sales), reflecting a decline from $186 million (9.3% of sales) a year ago amid lower demand across all lines of business.
Sales for the Components segment declined 7% from the prior-year quarter to $1,541 million. The segment’s EBITDA was $261 million (16.9% of sales) compared with the year-ago figure of $286 million (17.3% of sales). While sales in North America markets declined 24%, international sales climbed 26% year over year amid higher demand from China and India.
Sales for the Power Systems segment declined 13% from the year-ago quarter to $981 million. The segment’s EBITDA declined to $101 million (10.3% of sales) from $158 million (14% of sales) in the year-ago period. Power generation and industrial revenues fell 7% and 21%, 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 $18 million. The segment recorded EBITDA of negative $40 million amid high product and technology-related expenses.
Cummins’ cash and cash equivalents were $2,967 million as of Sep 27, 2020, up from $1,129 million on Dec 31, 2019. Long-term debt totaled $3,609 million, up from $1,576 million on Dec 31, 2019.
The firm expects fourth-quarter 2020 revenues to be on par with the third quarter level. Two weeks ago, Cummins announced a 3% hike in quarterly payout, marking an annual increase in dividend for the 11th consecutive year.
Zacks Rank & Stocks to Consider
Cummins currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the auto space include Lear Corporation LEA, LCI Industries LCII and BRP Inc DOOO, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Cummins Inc. (CMI): Free Stock Analysis Report
Lear Corporation (LEA): Free Stock Analysis Report
LCI Industries (LCII): Free Stock Analysis Report
BRP Inc. (DOOO): 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.