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Cummins Inc CMI

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Cummins Raises 2021 Sales and EBITDA Guidance as End Markets Continue Their Strength

Dawit Woldemariam Equity Analyst

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.

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Company Profile

Business Description

Cummins is a leading manufacturer of diesel engines used in commercial trucks, off-highway equipment, and railroad locomotives, in addition to standby and prime power generators. The company also sells powertrain components, which include filtration products, transmissions, turbochargers, aftertreatment systems, and fuel systems. Cummins is in the unique position of competing with its primary customers, heavy-duty truck manufacturers, who make and aggressively market their own engines. Despite robust competition across all its segments and increasing government regulation of diesel emissions, Cummins has maintained its leadership position in the industry.

500 Jackson Street, Box 3005
Columbus, IN, 47202-3005
T +1 812 377-5000
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 57,825