Yahoo Finance Here's What Analysts Are Forecasting For Cummins Inc. After Its Annual Results
Last week saw the newest full-year earnings release from Cummins Inc. (NYSE:CMI), an important milestone in the company's journey to build a stronger business. Revenues of US$24b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$14.48, missing estimates by 2.7%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Cummins
Following the recent earnings report, the consensus from22 analysts covering Cummins expects revenues of US$21.2b in 2020, implying a considerable 10.0% decline in sales compared to the last 12 months. Statutory earnings per share are expected to drop 18% to US$11.95 in the same period. Before this earnings report, analysts had been forecasting revenues of US$21.6b and earnings per share (EPS) of US$12.93 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share forecasts for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$181, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Cummins analyst has a price target of US$207 per share, while the most pessimistic values it at US$144. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Cummins's past performance and to peers in the same market. We would highlight that sales are expected to reverse, with the forecast 10.0% revenue decline a notable change from historical growth of 6.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 1.6% annually for the foreseeable future. It's pretty clear that Cummins's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Cummins. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Cummins's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Cummins going out to 2022, and you can see them free on our platform here..
It might also be worth considering whether Cummins's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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