Cummins Plunges on Lower Forecasst

A few weeks ago, I said that Cummins ($CMI) was going for a deep discount. I spoke too soon. The stock plunged yesterday after the company slashed its sales forecast for this year from 10% to 0%.

The culprit is, as you might guess, weakness from overseas markets. The key fact is that Cummins generates two-thirds of its revenue from outside the United States. The company said that revenue for Q2 will come in at $4.45 billion while Wall Street had been expecting $5.07 billion.

The good news for investors is that Cummins is raising its quarterly dividend from 40 cents to 50 cents per share. I still think Cummins is underpriced but it’s nowhere near the bargain I had believed.

Posted by Eddy Elfenbein on July 11th, 2012 at 2:16 pm

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Tickers: CMI