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Cummins (CMI) Surpasses Q1 Earnings & Revenue Estimates

Cummins Inc.CMI reported adjusted earnings of $3.30 per share in first-quarter 2018, surpassing the Zacks Consensus Estimate of $2.91. The company's earnings per share were $2.36 in the year-ago quarter.

Excluding tax charges, net income was $403 million in first-quarter 2018.

Revenues improved 21% year over year to $5.57 billion in the reported quarter. The top line also surpassed the Zacks Consensus Estimate of $5.17 billion. The year-over-year rise was owing to strong demand for trucks, construction and mining equipment.

Cummins Inc. Price, Consensus and EPS Surprise

Cummins Inc. Price, Consensus and EPS Surprise | Cummins Inc. Quote

Operating income decreased to $530 million from $540 million a year ago. Earnings before interest and taxes (EBIT) were $700 million (12.6% of sales) compared with $705 million (15.4% of sales) a year ago.

Segmental Performance

Sales at the Engine segment grew 21% to $2.4 billion on the back of an increase of 20% in on-highway revenues and 23% in off-highway revenues, resulting from growing demand in global truck and construction market. The segment's EBIT increased to $286 million (11.7% of sales) from $273 million (13.5% of sales) a year ago.

Sales at the Components segment surged 30% to $1.8 billion, owing to revenue growth of 35% in North America, in addition to 25% increase in international sales, on the back of higher commercial-truck manufacturing in North America. The segment's EBIT was $227 million (12.9% of sales) compared with the year-ago tally of $216 million (16.1% of sales).

Sales at the Power Generation segment improved 22% to $1.1 billion, banking on increased demand in mining, oil and gas, and power generation markets. The segment's EBIT rose to $142 million (13.2% of sales) in first-quarter 2018 from $85 million (9.6% of sales) in the year-ago quarter.

Sales at the Distribution segment increased 13% to $1.9 billion. Revenues benefited from 15% rise in the North American segment and 8% growth in international markets. The segment's EBIT plunged to $123 million (6.6% of sales) from $130 million (7.9% of sales) a year ago.

Financial Position

Cummins' cash and cash equivalents decreased to $1.21 billion as of Apr 1, 2018, from $1.37 billion as of Dec 31, 2017. Long-term debt totaled $1.57 billion as of Apr 1, 2018, a slight decline from $1.59 billion recorded on Dec 31, 2017.

At the end of first-quarter 2018, Cummins' net operating cash outflow was $117 million compared with an inflow of $379 million in the same period last year. Capital expenditures declined to $72 million from $81 million in the same time frame.

Capital Deployment

During first-quarter 2018, Cummins returned $341 million to shareholders in forms of dividends and share buybacks. This was in sync with the company's plan to return 50% of operating cash inflow in 2018.

2018 Guidance

For 2018, Cummins anticipates revenues to rise 10-14% compared with the prior outlook of 4-8%. EBIT is expected to be 15.4-15.8%, a decline from the previous projection of 15.8-16.2%.

Zacks Rank & Stocks to Consider

Cummins carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the auto space are BMW AG BAMXF , Dana Incorporated DAN and Spartan Motors, Inc. SPAR , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

BMW has expected long-term growth rate of 4.5%. Over a year, shares of the company have gained 15.9%.

Dana has expected long-term growth rate of 10%. Shares of the company have risen 18.1% in the past year.

Spartan Motors has expected long-term growth rate of 15%. Over a year, shares of the company have gained 108.8%.

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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.


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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