Tags: Cummins | global | market | CMI

Cummins In Position to Increase Global Market Share

By    |   Tuesday, 21 August 2012 03:50 PM

Cummins (CMI) is in a good place to grow from global sales, thanks to its significant export business and wide network of dealers and distributors. Analysts see the engine maker in position to increase market share as a result.

Cummins designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products, including filtration, exhaust aftertreatment, fuel systems, controls systems, air handling systems and electric power generation systems.

The company sells its products to original equipment manufacturers (OEMs), distributors and other customers worldwide. It serves its customers through a network of more than 600 company-owned and independent distributor locations and more than 6,500 dealer locations in more than 190 countries and territories.

The engine segment, at 52 percent of sales, manufactures and markets a broad range of diesel and natural gas powered engines under the Cummins brand name, as well as certain customer brand names, for the heavy- and medium-duty truck, bus, recreational vehicle (RV), light-duty automotive, agricultural, construction, mining, marine, oil and gas, rail and governmental equipment markets.

The company also makes engine components and power generation systems and has a distribution arm, each of these three as reporting segments.

Cummins has a market cap of $19.56 billion in a sector, machinery, where the average company size is $6.79 billion. Its trailing 12-month P/E ratio is 16.02 and its five-year projected price-to-earnings-growth (PEG) ratio is 0.8, compared to 1.26 for the sector.

Its projected earnings per share growth for the coming year is 10.86 percent, compared to a sector average of 15.83 percent.

Leading edge

Analysts are positive on CMI, with buy or outperform calls from Jefferies, Lehman Brothers, Smith Barney, Standard & Poor’s Equity Research, Piper Jaffray, and UBS.

“For the long term, with over 50 percent of its sales derived from outside North America, we believe CMI should benefit from its leading-edge technology in truck engines, helping it gain market share in emerging market countries and infrastructure-related power generation equipment,” S&P analysts wrote on Aug. 13.

“We think CMI will continue to use technology and its strong balance sheet to increase market share. Although the pace of the economic recovery may have slowed, we still expect improving investor sentiment on signs of stronger economic growth.”

Cummins next reports on Oct. 23.

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Tuesday, 21 August 2012 03:50 PM
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