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Cummins
Coming off a prolonged downturn in U.S. manufacturing, engine maker Cummins multiplied its profits fourteenfold since 2003, to a record $715 million in 2006. Despite its efforts to go global—Cummins booked half of its sales overseas last year—its uptrend is likely to end in 2007. The company is growing in India and China, but counts heavily on American-nameplate truck clients, building heavy-duty engines for DaimlerChrysler’s Ram pickups and Navistar International’s long-haul rigs. And U.S. truck sales are hitting the brakes. As a result, CEO Theodore “Tim” Solso warns that profits probably will drop at least 19% this year. Already, the outlook is undermining Cummins’ stock. Its shares have tripled since Jan. 1, 2004, to an all-time high of $145.69 in mid-February, but have since lost 6%. Longer term, though, Solso foresees higher numbers as the U.S. truck market rebounds and developing nations continue their hurried expansions. Cummins recently began its fifth engine-making joint venture in China, and bought out its partner in an Indian joint venture.
| Overall Grade | A- |
|
| Market Data | CMI | |
| Market Value (2/28/2007) |
$6.8 Billion |
|
| Profitability* | 22.7% | B |
| Sales Growth Rate** | 21.3% | A- |
| 12-Month Sales | $11.4 Billion |
|
| 12-Month Net Income | $0.7 Billion |
|
| Total Return | Past 12 Months25.7% | Past 36 Months184.4% |
| Economic Sector | Industrials | |
| Industry | Construction & Farm Machinery & Heavy Trucks | |
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.
