Analyst Note| Dawit Woldemariam |
Cummins reported strong first-quarter performance, leading the company’s management team to raise 2021 guidance significantly. We’ve raised our fair value estimate to $228 from $218, reflecting stronger near-term sales and EBITDA margin assumptions. In 2021, we now expect revenue growth to be approximately 22%, with EBITDA margins reaching 15.9%. Turning to the quarter, revenue increased 22% year over year to $6.1 billion, as freight markets remained hot. The components business showed the most upside, growing 43% year over year. Strong truck demand in North America, Europe, India, and China led to increased sales of powertrain components.