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Cummins (CMI) Q1 Earnings Beat Estimates, Reaffirms Outlook

Cummins Inc. CMI is a leading global 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 is poised to benefit from its innovative products. Further, Cummins’ Distribution segment is poised to gain from the acquisitions in North America.

However, Cummins operates in a highly competitive environment. Cummins is facing a challenging situation due to sluggish global markets, which is considerably affecting its results. Global off-highway and power generation markets are also under pressure with no sign of improvement.

Estimate Trend & Surprise History

Investors should note that the first-quarter earnings estimate for Cummins has decreased by a penny to $1.77 over the past 30 days.

The company has delivered negative earnings surprises. It has missed the Zacks Consensus Estimate in 3 of the trailing 4 quarters with an average miss of around 4.95%. Thus, investors have been eagerly awaiting Cummins’ latest earnings report.

We have highlighted some of the key stats from this just-revealed announcement below:

Earnings

Cummins’ earnings decreased 8.3% to $1.87 per share in the first quarter of 2016, but surpassed the Zacks Consensus Estimate of $1.77.

Revenues

Cummins reported revenues of $4.29 billion, down 9% year over year. Revenues also missed the Zacks Consensus Estimate of $4.33 billion. The year-over-year decline was due to lower production in the North American heavy-duty truck market and sluggish global demand for off-highway and power generation equipment.

Key Stats/Developments to Note

For 2016, Cummins anticipates revenues to decline by 5% to 9% and EBIT is expected in the range of 11.6%–12.2%.

Zacks Rank

Currently, Cummins has a Zacks Rank #3 (Hold), but that could change following its earnings report which has just released.

Market Reaction

Cummins’ share price was inactive following the release. It would be interesting to see how the market reacts to the results during the trading session today.

Check back later for our full write up on Cummins’ earnings report!

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