Unusual Social Activity Around Cummins (CMI) Today

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 an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Cummins as such a stock due to the following factors:

  • CMI has more that 20x the normal benchmarked social activity for this time of the day compared to its average of 1.94 mentions/day.
  • CMI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $163.9 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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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 2.1%. CMI has a PE ratio of 18.3. Currently there are 11 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 1.1 million shares per day over the past 30 days. Cummins has a market cap of $27.7 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 1.6% with 2.50 days to cover. Shares are up 6.5% year-to-date as of the close of trading on Friday.

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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, 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 ratings report include:
  • The revenue growth came in higher than the industry average of 4.0%. 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 29.73% 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 exceeded that of the S&P 500 and the Machinery industry average. 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.

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