Cummins Raises Sales Targets - Analyst Blog
September 14 2011 - 12:16PM
Zacks
Cummins Inc. (CMI) upgraded its long term
outlook for revenues and earnings based on tightening diesel engine
emission standards, rising price of energy, globalization and
growing investments in infrastructure.
The company expects to achieve $30 billion in sales, with
earnings before interest and taxes (EBIT) of 18% of sales in 2015.
This translated into an annual growth rate of 14% during the
period.
The company foresees four of its operating segments to generate
strong revenue growth. It believes 2011 to be another record year
despite uncertainty in the market as construction markets in North
America continue to recover and truck market recovery is under
way.
Cummins believes tightening diesel engine emission standards and
regulations will help it to leverage its position as the technology
leader in both emissions reduction and fuel economy improvements.
Secondly, rising price of energy is likely to boost the demand for
fuel-efficient engines, thereby benefiting the company’s power
generation business.
Thirdly, intensive globalization will continue to benefit the
company, as original equipment manufacturers (OEMs) in developing
economies will come forward to use the company’s technology and
distribution network. Lastly, growing investments in infrastructure
will boost demand for the company’s engines and power generation
technology.
Columbus, Indiana-based Cummins is a leading worldwide designer,
manufacturer and distributor of diesel and natural gas engines,
electric power generation systems, and engine-related components,
fuel systems, controls and air handling systems.
The company’s customer base comprises leading manufacturers,
including Chrysler LLC, Daimler AG (DDAIF), Volvo
AB, PACCAR Inc. (PCAR), Navistar
International Corporation (NAV), CNH Global N.V., Komatsu,
Scania AB, Ford Motor Company (F) and
Volkswagen (VLKAY).
The Zacks #2 Rank (Buy) company posted a profit of $505 million
or $2.60 per share in the second quarter of 2011, which was
significantly higher than the year-ago profit of $246 million or
$1.25 per share.
However, excluding the after-tax gain of $37 million or 19 cents
per share during the quarter, the company’s adjusted income stood
at $468 million or $2.41 per share, well ahead of the Zacks
Consensus Estimate of $2.01 per share.
Besides, Cummins reported EBIT of $707 million (15.2% of sales),
up from $401 million (12.5% of sales) in the second quarter of
2010. Reported EBIT in the second quarter excluded a gain of $68
million related to the sale of the exhaust business from the
Components segment.
Revenues in the reported quarter amounted to $4.64 billion, up
45% from $3.21 billion in the year-ago quarter, mainly driven by
strong performance across all the major markets. Revenues also
surpassed the Zacks Consensus Estimate of $4.25 billion.
CUMMINS INC (CMI): Free Stock Analysis Report
DAIMLER AG (DDAIF): Free Stock Analysis Report
FORD MOTOR CO (F): Free Stock Analysis Report
NAVISTAR INTL (NAV): Free Stock Analysis Report
PACCAR INC (PCAR): Free Stock Analysis Report
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