Cummins' quarterly figures beat Wall Street forecasts

Ticker: CMI

Author: Stock Analyst  Date: 2021/05/11

American manufacturer of diesel engines for tractors, buses, armored vehicles and self-propelled ships Cummins released its financial results for the first quarter, according to which net income increased by 18% YoY to $ 603 million or $ 4.07 per share, exceeding the average forecast of analysts in $ 3.46 per share.

The company's revenues for the reporting period grew by 22% YoY to $6.1 billion, which was better than market expectations of $5.3 billion, while sales in North America grew by 7% YoY, and revenues on the international market jumped 45% YoY, driven in part by stronger sales in China and India.

Engine business revenue increased 14% YoY to $ 2.5 billion, beating the $ 2.2 billion consensus; the revenue of the power equipment manufacturing division grew by 16% YoY to $ 1.02 billion against the expected $ 920 million; component segment revenues rose 43% YoY to $ 2.2bn, outperforming the $ 1.73bn forecast; distribution division's revenue grew by 1% y / y to $ 1.84 billion, slightly short of analysts' forecast of $ 1.88 billion; The revenues of the division for the production of electrical equipment jumped 3.5 times and reached $ 35 million, exceeding the experts' expectations of $ 24.5 million.

The company estimates that in fiscal 2021, revenue will grow by 20-24% y / y, and EBITDA - by 15.5-16% y / y. At the same time, Cummins management expects sales to increase in all regions of its presence. In addition, the company expects to channel 75% of its operating cash flow to shareholders in 2021 in the form of dividend payments and share repurchases.

Since the beginning of this year, the company's shares have risen in price by 22%, and we reiterate our Buy recommendation on them. The target price for March 2022 is $ 344.7, which is equivalent to 27% upside from current levels.