Cummins Inc (CMI): Today's Featured Industrial Goods Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Cummins ( CMI) pushed the Industrial Goods sector lower today making it today's featured Industrial Goods laggard. The sector as a whole closed the day down 0.3%. By the end of trading, Cummins fell $3.05 (-3.4%) to $87.79 on heavy volume. Throughout the day, 8.3 million shares of Cummins exchanged hands as compared to its average daily volume of 2.3 million shares. The stock ranged in price between $86.50-$89.60 after having opened the day at $86.58 as compared to the previous trading day's close of $90.84. Other companies within the Industrial Goods sector that declined today were: Continental Materials Corporation ( CUO), down 13.5%, Ballard Power Systems ( BLDP), down 11.7%, Material Sciences Corporation ( MSC), down 11.4%, and Real Goods Solar ( RSOL), down 6.7%.
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Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, and engine-related component products worldwide. It operates in four segments: Engine, Components, Power Generation, and Distribution. Cummins has a market cap of $17.54 billion and is part of the industrial industry. The company has a P/E ratio of 9.2, equal to the average industrial industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Shares are up 3.2% year to date as of the close of trading on Tuesday. Currently there are five analysts that rate Cummins a buy, no analysts rate it a sell, and 10 rate it a hold.

TheStreet Ratings rates Cummins as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the industrial goods sector could consider Industrial Select Sector SPDR ( XLI) while those bearish on the industrial goods sector could consider ProShares Short Dow 30 ( DOG).

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