Posts Tagged ‘CMI’

  • Scattered Thoughts
    , September 25th, 2012 at 10:55 am

    The stock market is up again this morning but only by a modest amount. The market was helped by a strong Case-Shiller report and news that consumer confidence rose to a seven-month high.

    I want to pass on a few scattered unrelated thoughts about some stocks.

    FactSet Research Systems ($FDS) is down today even though they beat earnings and guided inline. I like this company a lot and it used to be a Buy List member. Unfortunately, I think the price is way too high. I wish it would come down a lot.

    I often tell investors to ignore what happens to stocks after you sell them. Of course, I ignore this advice all the time only to my detriment. Of last year’s sells, I see that Gilead ($GILD) is up over 65% this year, Deluxe ($DLX) is up by 38% and Abbott Labs ($ABT) is up by 25%. Deep sigh.

    I’ve been watching Global Payments ($GPN) lately. The stock was crushed earlier this year due to an embarrassing security breach. You’ll notice that many good bargains often have dents and scratches in them, but the question is how damaging are they. GPN still looks like a strong business. They report earnings tomorrow. The stock should probably be about $10 higher but I understand the market’s reticence. I’m not saying it’s a clear buy but it’s one to watch.

    Seneca Foods ($SENEA) is one of those odd stocks I love. No one follows them but they continue to prosper. The stock is at a new 52-week high.

    Cummins ($CMI) seems to be a very attractive stock. I’m surprised the stock is so low. The same could be said for Crane ($CR).

  • Cummins Plunges on Lower Forecasst
    , July 11th, 2012 at 2:16 pm

    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.

  • Cummins Is Going for a Deep Discount
    , June 26th, 2012 at 4:03 pm

    It’s hard not to be impressed by Cummins ($CMI). Here’s a company description from Hoovers:

    If it’s comin’ around the mountain, it could have a Cummins’ engine powering it. The company makes about half of its revenues from its Engine segment which makes diesel and natural gas powered engines for the heavy and mid-duty truck, RV, automotive, and industrial markets, along with marine, rail, mining, and construction. Its other complementary business segments include Components (filtration products and fuel systems); Power Generation (vehicle and residential generators); and Distribution (product distributors and servicing). Major customers include OEMs Chrysler, Daimler, Ford, Komatsu, PACCAR, and Volvo. About two-thirds of Cummins’ sales are from outside the US.

    The stock is currently at about $90 per share. Wall Street expects earnings of $10.55 per share for this year and $11.79 per share for 2013.

    In May, Cummins said they see sales rising by 10% this year with EBIT in the range of 14.5% to 15% of sales. They had $18 billion in sales last year, so a 10% rise comes to $19.8 billion, and EBIT works out to $2.87 billion to $2.97 billion. The current market value is just over $17 billion.

    The last six earnings report have beaten expectations, sometimes by a very hefty margin. My simple stock valuation method gives Cummins fair value of $157.

    As I’ve said before, I don’t view the valuation method as a precise tool, but it’s a good quick way to see how reasonably a stock is valued. Cummins looks to be very inexpensive.