On Wednesday, Citi maintained a Buy rating on Cummins (NYSE:CMI) and increased the price target to $375 from $345. The revision reflects updated earnings per share (EPS) estimates for the upcoming years, as detailed by the firm’s latest model changes.
The firm has adjusted its 2024 EPS estimate for Cummins upward to $19.65, a slight increase from the previous $19.55 forecast. This adjustment is attributed to more optimistic projections for the North American On-Highway market, which is expected to perform better than initially thought.
Conversely, the 2025 EPS estimate has been revised downward to $21.65 from $21.75. This decrease is due to lowered expectations for the North American On-Highway market. However, this negative impact is partially mitigated by anticipated improvements in earnings from Power Systems, Accelera, and joint venture contributions.
Looking further ahead, Citi’s model projects a more substantial increase for Cummins’ 2026 EPS, setting it at $26.40, up from the previous estimate of $26.20. The firm cites higher assumptions for Power Systems performance, joint venture earnings, and contributions from Accelera as the primary drivers for this enhanced outlook.
Cummins, a global power leader, is known for its broad portfolio of products, including diesel, , electric, and hybrid powertrains. This price target adjustment by Citi signals confidence in the company’s ability to grow earnings across various segments of its business in the coming years.
In other recent news, Cummins Inc (NYSE:). has reported strong Q2 results for 2024, with sales reaching $8.8 billion, marking a 2% increase from the previous year, and EBITDA rising to $1.35 billion, representing 15.3% of sales. Following these results, Baird raised its price target for Cummins shares to $330, while Citi reaffirmed its Buy rating on the stock, strengthening its conviction in the company’s positive prospects through 2025.
Cummins has also formed strategic partnerships with Isuzu Motors and Daimler (OTC:) Trucks and buses, and received a $75 million grant from the Department of Energy. The company returned value to shareholders, increasing its quarterly dividend by 8.3% and repurchasing $230 million in shares.
Despite an anticipated softening North American heavy-duty truck market in the latter half of the year, Cummins remains optimistic due to strong demand in the power generation market and consistent performance in the Chinese truck market. Analysts noted that Cummins raised its full-year 2024 revenue outlook to down 3% to flat and EBITDA to 15% to 15.5%.
InvestingPro Insights
Citi’s optimistic outlook on Cummins aligns with several key metrics and insights from InvestingPro. The company’s market cap stands at $45.17 billion, reflecting its significant presence in the machinery industry. Cummins has demonstrated strong financial performance, with a revenue of $34.17 billion in the last twelve months as of Q2 2024, and a revenue growth of 6.15% over the same period.
InvestingPro Tips highlight Cummins’ financial strength and market position. The company has raised its dividend for 18 consecutive years, showcasing its commitment to shareholder returns. This is further supported by a current dividend yield of 2.21% and an impressive dividend growth of 15.92% in the last twelve months. Additionally, Cummins operates with a moderate level of debt, which aligns with Citi’s positive outlook on the company’s future earnings potential.
The stock’s recent performance has been notably strong, with a 23.41% price total return over the past three months and a 48.28% return over the past year. This momentum is reflected in the stock trading near its 52-week high, at 98.84% of that level.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for Cummins, providing a deeper understanding of the company’s prospects and market position.
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