2023-05-02 12:11:43 ET
Cummins’s ( NYSE: CMI ) stock declined on Tuesday as industrial stocks fell with the broader market as the Federal Reserve began its two-day meeting. By 12 p.m. ET, Cummins ( CMI ) was down 1.7% while the Industrial Select Sector SPDR Fund ETF ( XLI ) also fell 1.7%.
Concerns about the economy outweighed Cummins’s ( CMI ) improvement in quarterly results. The maker of engines and powertrains said revenue increased 32% from a year earlier to a record $8.45 billion in Q1, beating the consensus estimate of $8.13 billion.
Cummins’s ( CMI ) net income in Q1 was $790 million, or $5.55 a share, compared with $418 million, or $2.92 a share, a year earlier. The results included adjustments for one-time items such as divestitures. Q1 EPS beat the consensus estimate of $4.70 a share.
The company raised sales guidance for the year on strong demand for its products. Cummins ( CMI ) forecast that sales will increase by 15% to 20%, up from prior guidance of 12% to 17% for 2023.
Management is optimistic about its Meritor business, expecting it to generate revenue of $4.7 billion to $4.9 billion, up from $4.5 billion to $4.7 billion previously for the year. Cummins ( CMI ) acquired Meritor last year.
"We have raised our guidance on revenue and profitability for 2023 due to continued demand for Cummins' products and services," Jennifer Rumsey, CEO of Cummins, said in a statement. "We will continue monitoring global economic indicators closely to ensure we are prepared should economic momentum slow."
Seeking Alpha contributor Welbeck Ash Research has a Hold rating on Cummins ( CMI ) on its current valuation . Contributor Rob Barnett rates Cummins ( CMI ) as a Sell on questions about the long-term viability of the diesel-engine business .
More on Cummins
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- Class 8 truck orders pick back up in February but a tough road lies ahead
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Cummins falls as industrial stocks face selling pressure