2. Cummins (CMI) builds diesel and natural gas engines, electric power generation systems and related components. Its stock has surged 64% in the past 12 months, outperforming indices. It has corrected 11% in 2011. Cummins' adjusted fourth-quarter earnings advanced 34% to $1.84, beating analysts' consensus estimate by 7.4%. Sales, which rose 22%, exceeded consensus by 5.1%. The gross margin widened from 25% to 26% and the operating margin rose from 9.3% to 11%. Cummins has $1.4 billion of cash and $843 million of debt.
Cummins shares sell for a trailing earnings multiple of 19 and a forward earnings multiple of 11, 21% and 32% discounts to machinery peer averages. Yet, its book value multiple of 4.1 and cash flow multiple of 19 represent premiums. Of stock researchers following Cummins, nine, or 53%, rate its stock "buy" and eight rank it "hold." None rank it "sell." Credit Suisse is the most bullish bank on Wall Street, predicting that Cummins will rally 42% to $139. Goldman expects a rise of 39% to $136. JPMorgan, ranking Cummins "neutral", still expects an advance to $112.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV