Tuesday, April 26, 2011

Cummins (CMI) Breaks Out of Trading Range with Yet Another Stellar Quarter

Cummins is one of the least appreciated plays on global growth, but this morning reported yet another stellar quarter, beating analysts' expectations by 36 cents; $1.75 v $1.44.   Nearly two thirds of sales are now outside the U.S., and the growth rates in some countries (China +66%, Brazil +39%, India +31%) are astounding.  Revenue in total rose to $3.86 billion from $2.48 billion a year earlier; +56%.  Cummins’ operating margin grew to 13.7% from 9.9% year over year.   Guidance was also raised; full year revenue now up to $17B from $16.4B analysts expected.   The freefall in the dollar isn't hurting either.    Full report here.

The stock has been range bound in 2011, with 3 attempts at breaking the $115 level, but today's gap up on earnings finally got the stock over that resistance.

This is simply one of those names you don't hear or read about in the mainstream financial media but has been a superstar as "making stuff" still works.  The type of company GE wishes it could be, but is too busy soliciting government handouts and favors, and avoiding taxes...

  • Engine segment sales of $2.4 billion were up 68 percent compared to the same quarter a year ago, which was artificially weak due to a change in emissions standards and the economic downturn. Segment EBIT of $290 million, or 12.1 percent of sales, was a quarterly record.
  • Engine shipments in the global heavy-duty truck market more than tripled year-over-year, while medium-duty truck engine shipments increased 114 percent. In addition, shipments to global industrial markets such as construction (up 60 percent) and mining (up 59 percent) also were strong.
  • Sales in the Components segment, propelled by recovery in Europe, growth in China and India, and higher content of emission controls products on engines in North America, were up 47 percent to a record $924 million. Segment EBIT of $105 million, or 11.4 percent, also was a quarterly record for the Components group.
  • Power Generation sales increased 54 percent to $795 million on the strength of improved sales in its commercial products. Total segment sales in Western Europe increased 88 percent; 81 percent in the Middle East and 47 percent in India. Segment EBIT was $89 million, or 11.2 percent of sales.
  • The Distribution segment saw a sales increase of 35 percent to $642 million due to growth in most major markets, especially Europe, North and Central America and Asia Pacific. Segment EBIT of $89 million, or 13.9 percent of sales, was a quarterly record.

Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins employs approximately 40,000 people worldwide and serves customers in approximately 190 countries.

[Feb 1, 2011: Cummins - Strange Non Reaction to Another Very Good Quarter]
[Nov 19, 2010: Bloomberg - Oldest Truck Fleet Since 1979 May Mean 56% Jump in North American Output]
[Oct 26, 2010:  Cummins Misses on Top and Bottom Lines, but Foreign Sales up to 63% of Revenue]
[Jul 27, 2010: Cummins Demolishes Estimates]
[Feb 11, 2009: WSJ - Cummins Engine Shifts Gears Amid Stall]
[Sep 23, 2007: Stock to Watch: Cummings Hitting on all Cylinders]

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