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Cummins Third Quarter Earnings
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Cummins is a company engaged in the design, manufacturing, and distribution of diesel and natural gas engines and related technologies. Its services to markets worldwide include electric power generation systems and engine-related component products.
In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: 12 Things You Need To Know About Financial Statements
The Numbers: Cummins posted an EPS above analyst expectations, despite revenues falling short of predictions. The company reported $1.86 per share versus the $1.84 per share estimate and revenues of $4.12 billion versus the $4.4 billion estimate. Revenue fell 11% from the same period last year while EPS is down 20.9%. Revenue declined last quarter after shrinking 4.1% to $4.45 billion in the second quarter. The company's net income for the quarter fell 22.1% to $352 million. This marks the second quarter in a row that the company's net income has fallen after profits tumbled 7.1% in the second quarter.
Management Quote: "Demand has dropped sharply over the last three months, reflecting a high degree of uncertainty among customers in most geographic markets," said Tom Linebarger, Chairman and Chief Executive Officer. "We have been responding to the conditions by delaying or cancelling projects, flexing production at some of our manufacturing plants, reducing discretionary expenses, and reducing our workforce by 1000 to 1500 people by the end of this year. We are continuing to fund projects that are important for future growth and meeting commitments to customers. We are working to respond to the conditions now to ensure the long term strength of the company and to best serve the many stakeholders who rely on Cummins long term success."
A Look Back: Net income has increased 22.9% year-over-year on average across the last five quarters. The biggest gain came in the third quarter of the last fiscal year, when income climbed 59.7% from the year-earlier quarter.
Looking Ahead: Analysts appear increasingly negative about the company's results for the next quarter. The average estimate for the fourth quarter has moved down from $2.49 a share to $1.87 over the last 30 days. Decreasing earnings estimates is generally a negative sign as it suggests analyst believe future earnings to be weaker than previously anticipated. For the fiscal year, the average estimate has moved down from $9.62 a share to $8.55 over the last 60 days.
In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: 12 Things You Need To Know About Financial Statements
The Numbers: Cummins posted an EPS above analyst expectations, despite revenues falling short of predictions. The company reported $1.86 per share versus the $1.84 per share estimate and revenues of $4.12 billion versus the $4.4 billion estimate. Revenue fell 11% from the same period last year while EPS is down 20.9%. Revenue declined last quarter after shrinking 4.1% to $4.45 billion in the second quarter. The company's net income for the quarter fell 22.1% to $352 million. This marks the second quarter in a row that the company's net income has fallen after profits tumbled 7.1% in the second quarter.
Management Quote: "Demand has dropped sharply over the last three months, reflecting a high degree of uncertainty among customers in most geographic markets," said Tom Linebarger, Chairman and Chief Executive Officer. "We have been responding to the conditions by delaying or cancelling projects, flexing production at some of our manufacturing plants, reducing discretionary expenses, and reducing our workforce by 1000 to 1500 people by the end of this year. We are continuing to fund projects that are important for future growth and meeting commitments to customers. We are working to respond to the conditions now to ensure the long term strength of the company and to best serve the many stakeholders who rely on Cummins long term success."
A Look Back: Net income has increased 22.9% year-over-year on average across the last five quarters. The biggest gain came in the third quarter of the last fiscal year, when income climbed 59.7% from the year-earlier quarter.
Looking Ahead: Analysts appear increasingly negative about the company's results for the next quarter. The average estimate for the fourth quarter has moved down from $2.49 a share to $1.87 over the last 30 days. Decreasing earnings estimates is generally a negative sign as it suggests analyst believe future earnings to be weaker than previously anticipated. For the fiscal year, the average estimate has moved down from $9.62 a share to $8.55 over the last 60 days.
by
Investopedia Staff
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