Cummins (NYSE:CMI) Shares Gap Down After Earnings Miss

Key Points

• Cummins shares fell sharply after the company reported quarterly EPS of $6.73, below the $7.21 consensus estimate. Revenue reached $9.46 billion, ahead of expectations and up 9.4% year over year.
• The company raised its quarterly dividend to $2.20 per share from $2.00, implying an annualized payout of $8.80 and a 1.4% yield.
• Analysts remain broadly positive, with 11 Buy ratings and four Holds, producing a “Moderate Buy” consensus and an average price target of $740.07, despite recent insider selling and the stock’s post-earnings decline.

Shares of Cummins Inc. (NYSE:CMI - Get Free Report) gapped down prior to trading on Tuesday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $648.85, but opened at $578.90. Cummins shares last traded at $610.91, with a volume of 412,511 shares.

The company reported $6.73 earnings per share (EPS) for the quarter, missing analysts' consensus estimates of $7.21 by ($0.48). The company had revenue of $9.46 billion for the quarter, compared to analyst estimates of $9.33 billion. Cummins had a net margin of 7.89% and a return on equity of 25.25%. Cummins's revenue for the quarter was up 9.4% on a year-over-year basis. During the same quarter last year, the firm posted $6.43 EPS.

Cummins Increases Dividend

The business also recently announced a quarterly dividend, which will be paid on Thursday, September 3rd. Investors of record on Friday, August 21st will be given a dividend of $2.20 per share. The ex-dividend date of this dividend is Friday, August 21st. This is a positive change from Cummins's previous quarterly dividend of $2.00. This represents a $8.80 annualized dividend and a dividend yield of 1.4%. Cummins's payout ratio is presently 41.52%.

Analyst Upgrades and Downgrades

A number of equities research analysts recently commented on CMI shares. Wells Fargo & Company increased their price target on Cummins from $794.00 to $874.00 and gave the company an "overweight" rating in a research report on Wednesday, June 17th. Morgan Stanley upped their target price on shares of Cummins from $752.00 to $761.00 and gave the stock an "overweight" rating in a research note on Friday, July 17th. Evercore reiterated an "outperform" rating and issued a $845.00 target price on shares of Cummins in a report on Monday, May 11th. JPMorgan Chase & Co. raised their price target on shares of Cummins from $600.00 to $725.00 and gave the company a "neutral" rating in a research report on Wednesday, May 6th. Finally, Raymond James Financial increased their price target on shares of Cummins from $675.00 to $745.00 and gave the company an "outperform" rating in a research report on Tuesday, May 26th. Eleven equities research analysts have rated the stock with a Buy rating and four have given a Hold rating to the company's stock. According to data from MarketBeat, the company presently has a consensus rating of "Moderate Buy" and a consensus price target of $740.07.

Insider Activity

In other Cummins news, VP Marvin Boakye sold 3,481 shares of Cummins stock in a transaction that occurred on Friday, May 8th. The shares were sold at an average price of $679.90, for a total transaction of $2,366,731.90. Following the transaction, the vice president directly owned 8,508 shares of the company's stock, valued at approximately $5,784,589.20. This trade represents a 29.03% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this hyperlink. Also, insider Brett Michael Merritt sold 701 shares of the business's stock in a transaction that occurred on Monday, May 11th. The shares were sold at an average price of $688.75, for a total value of $482,813.75. Following the completion of the sale, the insider owned 10,404 shares of the company's stock, valued at $7,165,755. The trade was a 6.31% decrease in their position. The SEC filing for this sale provides additional information. In the last three months, insiders sold 13,579 shares of company stock worth $9,377,684. 0.30% of the stock is currently owned by insiders.

Hedge Funds Weigh In On Cummins

Institutional investors have recently added to or reduced their stakes in the company. Juno Financial Group LLC purchased a new stake in shares of Cummins in the fourth quarter worth about $883,000. Truist Financial Corp grew its holdings in Cummins by 4.8% during the 4th quarter. Truist Financial Corp now owns 64,005 shares of the company's stock valued at $32,671,000 after buying an additional 2,951 shares in the last quarter. Smith Salley Wealth Management increased its stake in Cummins by 1,381.8% in the 4th quarter. Smith Salley Wealth Management now owns 21,768 shares of the company's stock worth $11,111,000 after acquiring an additional 20,299 shares during the last quarter. Westfield Capital Management Co. LP bought a new stake in Cummins in the 4th quarter worth approximately $7,797,000. Finally, Kepler Cheuvreux Suisse SA purchased a new stake in shares of Cummins during the 4th quarter worth approximately $7,869,000. Institutional investors own 83.46% of the company's stock.

Cummins Stock Down 6.1%

The business has a 50-day moving average price of $670.29 and a 200 day moving average price of $623.53. The company has a current ratio of 1.71, a quick ratio of 1.11 and a debt-to-equity ratio of 0.50. The stock has a market capitalization of $84.09 billion, a P/E ratio of 31.63, a P/E/G ratio of 1.55 and a beta of 1.24.

About Cummins

Cummins Inc NYSE: CMI is a global power technology company that designs, manufactures, distributes and services a broad portfolio of diesel and natural gas engines, electrified powertrains, power generation systems and related components. Founded in 1919 and headquartered in Columbus, Indiana, Cummins has grown into one of the world's leading suppliers of internal combustion engines and a provider of technologies that reduce emissions and improve fuel efficiency.

The company's product lineup includes heavy-, medium- and light-duty engines for on-highway and off-highway applications, generator sets and power systems for commercial and industrial use, and key engine components such as turbochargers, fuel systems, air handling, filtration and aftertreatment solutions.

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