cummins inc. stock hits a 52-week low: could it fall further?
TRANSCRIPT
![Page 1: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/1.jpg)
Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?
Source: Cummins
![Page 2: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/2.jpg)
Cummins faces three big challenges right now
![Page 3: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/3.jpg)
1 Worsening international markets
![Page 4: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/4.jpg)
What management said in Q3
“Industry orders in key end markets in Brazil and China are at multi-year lows and showing no signs of improvement in the near-term.”
Tom Linebarger, Chairman and CEO
![Page 5: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/5.jpg)
The two weakest markets right now
Brazil: Industry truck production slumped 53% year over year in Q3, with production hitting its lowest since 2004.
China: Industry demand for medium-and-heavy-duty trucks slipped 24% year over year in Q3. Cummins expects full-year industry sales to decline 30%.
![Page 6: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/6.jpg)
Why it hurts CumminsMarkets outside the
U.S./Canada contribute 40% to its revenue.
Thanks to the slowdown in global markets, Cummins now expects 2015 revenue to be flat to down 2% versus 2% to 4% growth projected earlier.
Source: Cummins Q3 Earnings Presentation
![Page 7: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/7.jpg)
2 Key business losing steam
![Page 8: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/8.jpg)
Engines sales under pressure
Cummins’ engines revenue slipped 10% year-over-year in Q3, with shipments of high-horsepower engines hitting lows not seen since Q3 2009. Key factors were:
Sluggish off-highway markets: Caterpillar slashed its outlook primarily because of lower demand from construction, mining, energy, and power sectors.
A challenging truck market in Brazil.
![Page 9: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/9.jpg)
Why it hurts CumminsEngines: Account for more than 40% of its revenue
The U.S./Canada: Cummins’ largest engine market, contributing nearly 70% to its revenue in Q3
Off-highway markets: Make up nearly one-third of Cummins’ engines revenue
High-horsepower engines: Constitute more than 10% of its engines revenue
![Page 10: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/10.jpg)
These charts say it all
Source: Cummins Q3 Earnings Presentation
![Page 11: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/11.jpg)
3 Currency headwinds
![Page 12: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/12.jpg)
The problem
For a company with a global footprint, a stronger U.S. dollar is a significant headwind as international sales translate into lower revenue when converted to U.S. dollars. Image Credit: M4D Group via Flickr
![Page 13: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/13.jpg)
Why it hurts Cummins
Cummins gets nearly 40% of its total revenue from international markets.
The company’s revenue was down 6% year over year in Q3, 4% of which was the result of currency fluctuations.
Continued strengthening of the U.S. dollar = lower revenue for Cummins.
![Page 14: Cummins Inc. Stock Hits a 52-Week Low: Could It Fall Further?](https://reader035.vdocuments.us/reader035/viewer/2022070518/58ec39cb1a28ab4a358b4737/html5/thumbnails/14.jpg)
The next billion-dollar iSecret The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-
new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early-in-
the-know investors! To be one of them, just click here.