Cummins Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Cummins (NYSE:CMI) will unveil its latest earnings on Tuesday, October 30, 2012. Cummins is a company engaged in the design, manufacturing, and distribution of diesel and natural gas engines and related technologies. Its services to markets worldwide include electric power generation systems and engine-related component products.

Cummins Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of $1.87 per share, a decline of 15% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from $2.19. Between one and three months ago, the average estimate moved up. It has dropped from $2.29 during the last month. Analysts are projecting profit to rise by 3.5% compared to last year’s $8.61.

Past Earnings Performance: The company’s quarterly results have come in above estimates for the last three quarters. Last quarter, the company booked net income of $2.45 per share versus a mean estimate of profit of $2.27 per share.

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Wall St. Revenue Expectations: Analysts are projecting a decline of 10.4% in revenue from the year-earlier quarter to $4.15 billion.

A Look Back: In the second quarter, profit fell 7.1% to $469 million ($2.47 a share) from $505 million ($2.60 a share) the year earlier, but exceeded analyst expectations. Revenue fell 4.1% to $4.45 billion from $4.64 billion.

Stock Price Performance: Between August 28, 2012 and October 24, 2012, the stock price had fallen $4.67 (-4.8%), from $96.94 to $92.27. The stock price saw one of its best stretches over the last year between October 11, 2012 and October 18, 2012, when shares rose for six straight days, increasing 7.7% (+$6.63) over that span. It saw one of its worst periods between November 14, 2011 and November 25, 2011 when shares fell for nine straight days, dropping 13.4% (-$13.37) over that span.

Key Stats:

On the top line, the company is looking to get back on the right track after last quarter’s drop snapped a string of revenue increases. Revenue rose 36% in the third quarter of the last fiscal year, 18.9% in the fourth quarter of the last fiscal year and 15.9%in the first quarter before dropping in the second quarter.

After last quarter’s profit drop broke a string of income increases, this earnings announcement is definitely a chance for a rebound. Net income rose 59.7% in the third quarter of the last fiscal year, 51.4% in the fourth quarter of the last fiscal year and 32.7% in the first quarter before declining in the second quarter.

Analyst Ratings: There are mostly holds on the stock with nine of 15 analysts surveyed giving that rating.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.03 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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