Cummins Downgraded to Neutral - Analyst Blog
29 November 2011 - 11:45PM
Zacks
We have downgraded our recommendation on Cummins
Inc. (CMI) to Neutral from Outperform. Headquartered in
Columbus, Indiana, 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.
Cummins primarily sells its products to original equipment
manufacturers (OEMs), distributors and other customers worldwide.
The company boosts an impressive clientele including leading
manufacturers like Chrysler LLC, Daimler AG
(DDAIF), Volvo AB (VOLVY), PACCAR
Inc. (PCAR), Navistar International
Corporation (NAV), CNH Global N.V.
(CNH), Komatsu,
Scania AB (SVKBF), Ford Motor Co.
(F) and Volkswagen.
The company released its third quarter earnings on October 25,
2011. Adjusted income increased to $2.20 per share from $1.33 in
the year-ago quarter. Revenues rose 36% to $4.63 billion, driven by
strong growth in the company’s key markets, including mining, oil
& gas, and North American and Brazilian on-highway as well as
favorable construction demand in Asia.
The macroeconomic environment in the U.S. is taking its toll on
Cummins. The company’s heavy- and medium-duty trucks (which
constitute 53% of the company’s portfolio; mostly U.S.-based) have
been hit badly of late, as have the construction segment.
In addition, it is also expected that the governments’ plans to
reduce inflation in India and China as well as strengthening U.S.
dollar would weaken the near-term demand for Cummins products. As a
result, Cummins reduced its revenue guidance to $17.5 billion–$18
billion for full-year 2011.
Considering all these, the shares of Cummins are also
maintaining a Zacks #3 Rank which translates into a Hold rating
over the short term.
CUMMINS INC (CMI): Free Stock Analysis Report
CNH GLOBAL NV (CNH): 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
VOLVO AB ADR B (VOLVY): Free Stock Analysis Report
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