Cummins (CMI) Q3 Earnings & Sales Top Estimates, Rise Y/Y

Cummins Inc. CMI reported third-quarter 2023 earnings of $4.73 per share, which reflects an improvement from the prior-year quarter’s earnings of $3.21 per share. The bottom line also topped the Zacks Consensus Estimate of $4.63 per share, thanks to higher-than-expected revenues across all segments. Cummins’ revenues totaled $8,431 million, up from $7,333 million recorded in the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $8,135 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

In the reported quarter, sales in the Engine segment were up 5% year over year to $2.9 billion. The metric topped our estimate of $2.8 billion. The outperformance was attributable to the increase in on-highway revenues. On-highway revenues increased 8% due to strong demand in the North American truck market and pricing actions. The segment’s EBITDA increased to $395 million (accounting for 13.5% of sales) from $362 million (13% of sales) and beat our estimate of $392 million.

Sales in the Distribution segment totaled $2.5 billion, up 13% year over year, beating our estimate of $2.46 billion. Higher sales in North America resulted in the outperformance. Revenues from North America jumped 14%, while international sales rose 11%. The segment’s EBITDA came in at $306 million (12.1% of sales), up from the year-ago quarter’s $225 million (10% of sales). The metric also surpassed our estimate of $274.7 million.

Sales in the Components segment totaled $3.2 billion, up 20% from the prior-year quarter and surpassed our estimate of $3.1 billion. Higher sales in North America and international markets resulted in the outperformance. Revenues in North America jumped 21%, while international sales rose 19%, thanks to the Meritor buyout. The segment’s EBITDA was $441 million (13.6% of sales) compared with the year-ago figure of $297 million (11% of sales). The metric missed our estimate of $470.3 million.

Sales in the Power Systems segment rose 7% from the year-ago quarter to $1.4 billion, topping our estimate of $1.35 billion. An increase in power generation revenues resulted in the outperformance. The segment’s EBITDA increased to $234 million (16.2% of sales) from $193 million (14.3% of sales) and beat our estimate of $218.4 million.

Sales in the Accelera segment came in at $103 million, soaring 106% from the year-ago level and topping our estimate of $89 million. The segment incurred a pretax loss of $114 million, which was wider than our estimate of $89.7 million. Costs associated with the development of electric powertrains, fuel cells and electrolyzers, as well as products to support battery electric vehicles, contributed to EBITDA losses.

Financials

Cummins’ cash and cash equivalents were $2,387 million as of Sep 30, 2023, up from $2,020 million on Dec 31, 2022. Long-term debt totaled $4,950 million, up from $4,498 million on Dec 31, 2022.

2023 Outlook Revised

For full-year 2023, Cummins expects revenues to grow 18-20% on a yearly basis, up from the prior guided range of 15-20%, thanks to robust demand across markets, particularly North America. EBITDA is now forecast to be in the range of 15.2-15.4% of sales, narrower than the previous estimated range of 15-15.7%. Cummins continues to stick to its plan of returning nearly 50% of its operating cash flow to shareholders in the form of dividends and share repurchases.

Zacks Rank & Key Picks

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

A few top-ranked players in the auto space include Toyota TMHonda HMC and Nissan NSANY, each sporting a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for TM’s fiscal 2024 sales and EPS implies year-over-year growth of 10.5% and 27.5%, respectively. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 4 cents and 21 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for HMC’s fiscal 2024 sales and EPS implies year-over-year growth of 7.7% and 29.4%, respectively. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 4 cents and 7 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for NSANY’s fiscal 2024 EPS implies year-over-year growth of 12.6%. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 10 cents and 3 cents, respectively, in the past 30 days.

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

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