The North American Trucking Downturn Continues to Weigh on Cummins' Results
We’re modestly raising our fair value estimate for Cummins by $1 to $119 as a lower-than-anticipated tax rate will improve 2016 earnings. As the North American truck market continued to experience cyclical headwinds in Cummins’ third quarter, lower income generation in the highly taxed U.S. spurred a 150-basis-point reduction in the projected tax rate to 25.5%. This ongoing weakness prompted the company to reiterate expectations for total sales to decline 9% in 2016; however, EBIT margin guidanc...Cummins is a diesel engine manufacturer. The company's segments include: Engine, which manufactures and markets a range of diesel and natural gas powered engines; Distribution, which is the company's primary sales, service, and support channel; Components, which supplies aftertreatment systems, turbochargers, transmissions, filtration products, electronics and fuel systems for commercial diesel and natural gas applications; Power Systems, which includes power generation, industrial, and generator technologies product lines; and New Power, which designs, manufactures, sells and supports electrified power systems ranging from fully electric to hybrid, along with components and subsystems.
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