Quarter: First-quarter profit multiplied to $149 million, or 75 cents, as revenue inched up 1.6%. The operating margin jumped from 2.5% to 7%. Cummins has $1.1 billion of cash and $735 million of debt, equaling a debt-to-equity ratio of 0.2.
Stock: Cummins has more than doubled during the past 12 months, outpacing U.S. benchmarks. It sells for a price-to-projected-earnings ratio of 14, a 31% discount to its peer average. Its PEG ratio of 0.3 indicates a 70% discount to estimated fair value.
Consensus: Of analysts covering Cummins, 12, or 60%, advise purchasing its shares and eight recommend holding them. Credit Suisse (CS) offers a target of $100, leaving a potential return of 32%. UBS (UBS) expects the stock to rise 29% to $98.