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Cummins (CMI) Outpaces Stock Market Gains: What You Should Know

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Cummins (CMI Free Report) closed the most recent trading day at $242.12, moving +1.67% from the previous trading session. The stock outpaced the S&P 500’s daily gain of 1.43%. Meanwhile, the Dow gained 1.58%, and the Nasdaq, a tech-heavy index, added 0.03%.

Heading into today, shares of the engine maker had lost 4.04% over the past month, lagging the Auto-Tires-Trucks sector’s gain of 3.73% and the S&P 500’s gain of 5.12% in that time.

Cummins will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $5.01, up 75.79% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $7.34 billion, up 25.52% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $15.87 per share and revenue of $27.69 billion. These totals would mark changes of +8.18% and +15.28%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Cummins. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.52% lower within the past month. Cummins is currently a Zacks Rank #3 (Hold).

In terms of valuation, Cummins is currently trading at a Forward P/E ratio of 15.01. This valuation marks a premium compared to its industry’s average Forward P/E of 13.68.

Meanwhile, CMI’s PEG ratio is currently 1.65. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. Automotive – Internal Combustion Engines stocks are, on average, holding a PEG ratio of 1.65 based on yesterday’s closing prices.

The Automotive – Internal Combustion Engines industry is part of the Auto-Tires-Trucks sector. This industry currently has a Zacks Industry Rank of 208, which puts it in the bottom 18% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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