Cummins shares fall on missed sales
The engine maker reports disappointing third-quarter results, largely due to underperformance in its 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%.
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[BRIEFING.COM] The stock market ended the Tuesday session on a lower note after generally upbeat earnings took the back seat to geopolitical concerns. The S&P 500 (-0.5%) and Nasdaq Composite (-0.1%) ended on their lows, while the Russell 2000 (+0.3%) displayed relative strength.
Once again, market participants were focused on quarterly reports in the early going, but geopolitical worries overshadowed the impact of mostly better than expected earnings. Specifically, equities ... More
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