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Trade-Ideas: Cummins (CMI) Is Today's New Lifetime High Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Cummins ( CMI) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Cummins as such a stock due to the following factors:

  • CMI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $160.5 million.
  • CMI has traded 1.3 million shares today.
  • CMI is trading at a new lifetime high.

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More details on CMI:

Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, and engine-related component products. It operates in four segments: Engine, Components, Power Generation, and Distribution. The stock currently has a dividend yield of 2%. CMI has a PE ratio of 16.9. Currently there are 9 analysts that rate Cummins a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Cummins has been 1.6 million shares per day over the past 30 days. Cummins has a market cap of $23.8 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.82 and a short float of 2.3% with 3.31 days to cover. Shares are up 17% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cummins as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 17.8%. Since the same quarter one year prior, revenues slightly increased by 1.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • CMI's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.25, which illustrates the ability to avoid short-term cash problems.
  • Compared to its closing price of one year ago, CMI's share price has jumped by 33.33%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CMI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $532.00 million or 41.48% when compared to the same quarter last year. Despite an increase in cash flow, CUMMINS INC's cash flow growth rate is still lower than the industry average growth rate of 64.15%.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Machinery industry average, but is less than that of the S&P 500. The net income has decreased by 11.7% when compared to the same quarter one year ago, dropping from $469.00 million to $414.00 million.

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