Cummins shares fall on missed sales

The engine maker reports disappointing third-quarter results, largely due to underperformance in its components unit.

By Kim Peterson Oct 26, 2010 11:14AM
Cummins (CMI) would have had a great quarter, if it weren't for that pesky components unit.

But alas, that unit dragged down third-quarter results and caused Cummins to miss sales expectations. Cummins shares were down some 5% in morning trading Tuesday.

Profit in the quarter came in at $283 million, or $1.44 a share -- triple the year-ago profit of $95 million, or 48 cents a share. Analysts were expecting $1.41 a share in profit.

Take this grain of salt with that profit picture, however: The company got an extra 11 cents in EPS from a tax refund in Brazil.

Revenue rose 34% to $3.4 billion from $2.53 billion in the year-ago quarter, but Wall Street was looking for $3.6 million.

The components unit had a sales increase of 30% and income (before taxes and interest) that more than doubled. But margins were the killer, Dow Jones reported, and ate into the unit's profit. Sales in the unit were 12% below what Wall Street wanted to see.

"Components looked like a bit of a disappointment," an analyst at JPMorgan Chase told Reuters.

Other parts of the company performed better. The engine and power-generation units each saw a 44% sales increase, while the distribution business reported a 36% increase.

The engine unit had one of its best quarters ever, the company said, despite a slow U.S. economic recovery and continued weakness in North American truck engine markets. Cummins said it has sold nearly 37,000 medium- and heavy-duty engines in North America this year.

The quarterly results were enough to help Cummins boost its full-year guidance. The company says that earnings before interest and taxes should be about 12.5% of sales estimated at $13 billion. Previously, the forecast was only 12%.


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.



Quotes delayed at least 15 min
Sponsored by:


There’s a problem getting this information right now. Please try again later.
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market began the new week on a cautious note. The S&P 500 lost 0.3%, but managed to erase more than half of its opening decline. Thanks to the rebound, the benchmark index reclaimed its 50-day moving average (1976.78) after slipping below that level in the morning.

Equities slumped at the open amid a couple global developments that dampened the overall risk appetite. Continued student protests in Hong Kong and a potential response from China weighed on the ... More


There’s a problem getting this information right now. Please try again later.
Sponsored by: