Why Cummins Inc (CMI) Stock Is Lower Today

NEW YORK (TheStreet) -- Shares of Cummins Inc. (CMI) are down -0.73% to $154.82 after Goldman Sachs (GS) removed the industrial goods company from its conviction buy list, yet maintained its "buy" rating based on a mixed end market outlook outside the U.S. and recent share gains.

Goldman Sachs' price target on shares is $175.

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Separately, TheStreet Ratings team rates CUMMINS INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate CUMMINS INC (CMI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, increase in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.2%. Since the same quarter one year prior, revenues rose by 12.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CMI's debt-to-equity ratio is very low at 0.23 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 1.48, which illustrates the ability to avoid short-term cash problems.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 39.73% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
  • The net income growth 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 increased by 19.9% when compared to the same quarter one year prior, going from $282.00 million to $338.00 million.
  • You can view the full analysis from the report here: CMI Ratings Report
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