Cummins Is Alluring... But Is It A Trap?
Stephen Simpson, CFA
Stephen Simpson, CFA
Tue, Oct. 11, 2:30 PM
Tue, Oct. 11, 10:28 AM
- There's a donnybrook breaking out between Fiat Chrysler Automobiles (FCAU +0.3%) and Cummins (CMI +1.8%) over recall costs for 130K Ram trucks with emissions problems.
- Fiat filed a lawsuit to recover $60M in costs for repairs it made on the Cummins engines. Cummins countered with a suit of its own.
- The dispute is giving an inside look at some of the some of the costs automakers take on with large recalls.
- Cummins is higher today after Goldman Sachs weighed in.
- Previously: Caterpillar and Cummins log gains after being touched by Goldman (Oct. 11)
Tue, Oct. 11, 10:03 AM
- Both have been hot stocks this year - CAT's up 30% and CMI 47% - but Goldman analyst Jerry Revich thinks there's another leg to come, and upgrades both to Buy, with Cummins added to the Conviction Buy list.
- CAT's price target is raised to $112 from $76, and suggests more than 25% upside from the current level. Cummins is hiked to $162 from $134, also suggesting more than 25% upside.
- In today's action, CAT is higher by 0.9% and CMI by 1.7%.
Wed, Oct. 5, 9:40 AM
- The engines exceed EPA 2017 greenhouse gas and fuel-efficiency standards and the highest quality standards across a 400 to 605 horsepower ratings range.
- Cummins' (CMI +1%) X15 also introduces an innovative approach to duty-cycle optimization, with two configurations, available as the Performance and Efficiency Series.
Fri, Sep. 30, 2:52 PM
- Cummins (CMI +3.2%) is initiated with a Buy rating and $150 price target at CLSA, which believes CMI shares are not expensive relative to trough expectations in 2017.
- CLSA believes the controversy surrounding CMI's market share decline in its core North American truck market is overblown in the near to medium term and is masking an improving North American on-highway market in late 2017 and improving global industrial end markets in Asia and even Latin America.
- The firm also notes CMI's pristine balance sheet for appreciation, as it yields fine returns to shareholders via dividends and share buybacks.
Thu, Sep. 22, 2:16 PM
- Fitch Ratings affirms its long-term default issue rating on Cummins (CMI +0.7%) and unsecured debt at a level of A. The ratings outlook from Fitch is kept at Stable. The update from Fitch on Cummins factors in the recent alliance between Navistar and Volkswagen.
- Fitch on CMI: "The company's solid balance sheet, low leverage and consistently positive free cash flow (NYSE:FCF) that enable CMI to cope with cyclicality in its heavy- and medium-duty truck, off-road equipment, and power generation markets."
- Full Fitch Rating report on Cummins
Wed, Sep. 7, 1:56 PM
- Cummins (CMI +2.4%) is higher even as Deutsche Bank initiates coverage with a Sell rating and a $111 price target, saying CMI's market share for NAFTA heavy-duty truck engines has contracted from the peak level by 16 percentage points to 29% with potential for further pressure over time.
- The firm notes that Paccar is moving toward its internal engine penetration target of 85%, and that Daimler is entering the North American market for medium-duty truck engines, and its DD8 platform is the “most viable competition" with CMI's ISB engine.
- Deutsche Bank says the two moves combined translate to a $0.90 mid-cycle EPS downside for CMI, not yet reflected in consensus estimates, with downside to the company’s shares due to an expected downward revision of EPS forecasts.
Tue, Sep. 6, 12:38 PM
- News of a deep alliance between Navistar (NAV +43.4%) and Volkswagen is creating some disruption in the truck sector. Analysts think the $256M lifeline from Volkswagen changes the discussion on Navistar away from impending bankruptcy.
- "Navistar’s partnership with a well-capitalized strategic leader such as VW with hopes of a full buyout later presents a better alternative for both equity and credit holders versus restructuring or waiting for a cyclical recovery," observes CreditSights.
- There's some anxiety with traders on the impact on rivals of a stronger Navistar. PACCAR (PCAR -1.5%), Cummins (CMI -6%), CNH Industrial (CNHI -0.9%), and Supreme Industries (STS -0.9%) are all lower in mid-day trading.
Tue, Sep. 6, 10:01 AM
Thu, Sep. 1, 10:24 AM
- Cummins (CMI -0.2%) will team with Peterbilt Motors Co., a division of PACCAR (PCAR -0.6%) to develop and demonstrate technologies under the U.S. Department of Energy SuperTruck II program.
- The two partnered together for SuperTruck I, first demonstrating more than 50% Brake Thermal Efficiency and analytically defining technologies needed to achieve 55% BTE.
Thu, Sep. 1, 8:42 AM| Thu, Sep. 1, 8:42 AM
Tue, Aug. 16, 5:47 PM
- The U.S. issues final carbon emissions standards for big trucks, in Pres. Obama's latest major rule seeking to clamp down on greenhouse gas emissions across the U.S. economy.
- The EPA and U.S. Department of Transportation rules would achieve 10% more carbon emission and fuel consumption reductions than last year’s proposed rules, likely raising the price tag price for tractor trailers and other long-haul trucks but cutting operating costs.
- Cummins (NYSE:CMI), a supporter of the rules, says it is confident it has the engine technologies to meet or exceed improvements required by the standards.
- The cost of tractors that pull freight trailers could rise 12%, Bloomberg calculates, impacting truckmakers such as Paccar (NASDAQ:PCAR), Navistar (NYSE:NAV), Daimler (OTCPK:DDAIF) and Volvo (OTCPK:VOLVY), raising costs for their products.
Tue, Aug. 16, 3:52 AM
- The Obama administration is expected to issue final rules today reducing greenhouse gas emissions from trucks over the next decade, likely one of the last major climate-related rules President Obama will issue before he leaves office.
- The final regulations, which aim to cut 1B metric tons of emissions, will be a game-changer for tractor-trailers, buses and other large vehicles with model years 2021 through 2027.
- Related tickers: CMI, ETN, NAV, PCAR, OTCPK:DDAIF, OTCPK:VOLVY
Tue, Aug. 2, 8:06 AM
- Net income of $406M, or $2.40 per diluted share vs. $471M, or $2.62 per diluted share in the same quarter a year ago.
- Revenue by segment: Engine -14%; Distribution +3%; Components -8%; Power Generation -16%.
- "We made strong progress in our cost reduction initiatives in the second quarter, while continuing to invest in and launch new products that will drive profitable growth in the future," said CEO Tom Linebarger.
- Based on the current forecast, the company expects full year 2016 revenues to be down 8-10%, lower than previous guidance of down 5-9%, primarily due to a lower outlook for North America truck production and weaker demand in global off-highway markets.
- CMI +0.6% premarket
- Q2 results
Tue, Aug. 2, 7:36 AM
Mon, Aug. 1, 5:30 PM
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