Underestimate Cummins (CMI) at your own risk. Although there has been plenty of talk about how tough conditions in Europe and China's inflation fears will lead heavy machinery demand to stagnate, companies like Caterpillar (CAT), Eaton (ETN), and PACCAR (PCAR) keep reporting an inconvenient truth that business is holding up pretty nicely. Much as I admit buying a cyclical industrial like Cummins at these levels makes me nervous, it's hard to argue with the performance and the potential.
A Mostly Solid Fourth Quarter
All in all, Cummins handily surpassed analyst expectations for the quarter. Revenue rose 19% (and 6% sequentially) and beat the average Wall Street guess by almost 5%. Growth was led by a very strong result in engines, where top-line growth was 23% and external growth was 25%. Components also did well, growing 19% this quarter. Power was the laggard, though, and up just 2% while distribution revenue rose 19%.
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Cummins Earnings Show The Company Has Another Gear
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