Cummins Shares Buck Wall Street Tide
There’s a saying among traders that you “don’t fight the tape.” But as the Dow and other major indices plunged Thursday, investors were snapping up shares of Cummins Engine Co. (CMI) after its earnings beat analysts’ expectations. Shares of Cummins closed at $116.15 a share, up 5.77 percent on the day, after trading as high as $122 a share early in the session. Prior to yesterday’s opening bell, Cummins posted second-quarter net income of $214 million, or $2.13 a share. That was down 3% from $220 million ($2.19 a share) a year ago, but far outpaced the $1.59 a share analysts polled by Thomson Financial had been expecting.
As we recently noted,has Cummins has benefited from record sales of generators, supported by strong demand from the data center sector. That trend continued in the second quarter.
Commercial generator sales, rose 33 percent compared to the same period in 2006, while alternator sales increased 40 percent, the company said. Sales in Cummins’ overall power generation unit rose 29 percent from the year earlier period to $769 million, with especially especially strong sales in North America, the Middle East, Europe and India. The strong performance of the power generation business has helped offset a slump in Cummins’ core market of diesel truck engines.
“This was a tremendous quarter for Cummins and is further proof that the work we have done to diversify our business is paying off,” said Cummins Chairman and Chief Executive Officer Tim Solso. “Our strong performance in the first half of the year has put us in a position to make 2007 Cummins’ most profitable year ever – which would be a significant feat given the challenges we have faced in the heavy-duty truck engine market.”