Cummins Inc. Expands Market Reach with Strong Performance in Power Systems
Impressive Stock Gains Outshine Major Indices
Columbus, Indiana-based Cummins Inc. (CMI) designs, manufactures, distributes, and services diesel and natural gas engines, as well as electric and hybrid powertrains, on a global scale. With a market cap of $50.9 billion, the company supplies products to original equipment manufacturers (OEMs), distributors, and dealers through a comprehensive network of company-owned and independent facilities.
CMI Stock Performance Tops the Market
Over the past year, shares of Cummins have significantly outperformed the overall market. CMI’s stock has risen 65.3%, while the S&P 500 Index ($SPX) has increased by nearly 31.8%. In 2024, CMI stock remains strong, up 54.9% year-to-date, compared to the SPX’s 25.8% rise.
Comparative Analysis with Industrial Sector
When comparing CMI’s performance to the Industrial Select Sector SPDR Fund (XLI), the difference is marked. The ETF boasts a gain of roughly 35.4% in the past year, but CMI’s year-to-date returns exceed the ETF’s 25.6% increase.
Strong Production Milestones Drive Success
A crucial element of CMI’s outstanding performance stems from advancements in its Power Systems and Distribution businesses. Recently, the company has started full production of the X15N natural gas engine at the Jamestown Engine Plant, which is noteworthy as the facility recently celebrated its 50th anniversary during Q3. This engine supports various fuel options including natural gas, advanced diesel, and hydrogen.
Positive Q3 Results and Analyst Insights
On November 5, CMI shares surged more than 8% following the release of its Q3 results. The company reported earnings per share (EPS) of $5.86, surpassing analyst expectations of $4.84. Additionally, CMI’s revenue reached $8.5 billion, exceeding forecasts of $8.3 billion.
Future Projections and Analyst Ratings
For the current fiscal year ending in December, analysts anticipate a 5.4% growth in CMI’s EPS, predicting a diluted EPS of $20.75. CMI’s history of earnings surprises has been mixed, with the company exceeding forecasts twice in the past four quarters while missing estimates on two occasions.
Among the 18 analysts who cover CMI stock, the consensus rating is a “Moderate Buy.” This rating includes five “Strong Buy” ratings, one “Moderate Buy,” ten “Hold” ratings, one “Moderate Sell,” and one “Strong Sell.”
Updated Price Targets Reflect Optimism
The ratings have been consistent over the past three months. On November 20, Citigroup Inc. (C) analyst Kyle Menges maintained a “Buy” rating and raised the price target for CMI to $415, suggesting an upside potential of 11.9% from current levels. The average price target sits at $371.53, indicating a slight premium over CMI’s present stock price. Notably, the highest price target in the market, set at $436, implies an upside of 17.5%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
