Cummins Earnings: Performance Was Largely in Line With Our Expectations

Cummins reported lower first-quarter earnings, as we had expected. Many of the company’s end markets have cooled, given that truck production has started to normalize. Even so, we elected to increase our fair value estimate to $246 per share, up from $240 previously. The increase was primarily due to the time value of money since our last update. We also made slight tweaks to our near and long-term forecasts. In 2024, we expect Cummins’ sales to be down 4% year on year, roughly 50 basis points below the midpoint of guidance (down 2%-5%). On profitability, we forecast EBITDA margins to land at 15.0%, as pricing helps to partly offset lower volumes this year.