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

Cummins (CMI) 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 soliciting government handouts and favors…

  • 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.

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About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

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