Cummins Inc. (CMI) Earnings: An Early Look

With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Cummins Inc. (NYSE:CMI)

Let's turn to Cummins Inc. (NYSE:CMI). The engine-maker has rebounded sharply in recent months as the economy starts to pick up steam, but will Cummins be able to sustain its current trajectory? Let's take an early look at what's been happening with Cummins over the past quarter and what we're likely to see in its quarterly report Wednesday.

Stats on Cummins Inc. (NYSE:CMI)

Analyst EPS Estimate $1.76
Change from Year-Ago EPS (31.0%)
Revenue Estimate $4.04 billion
Change from Year-Ago Revenue (17.8%)
Earnings Beats in Past 4 Quarters 4

Source: Yahoo Finance.

Can Cummins keep revving up its stock? Analysts aren't sure how well Cummins can keep up its fast pace of growth, having reined in their earnings-per-share estimates by $0.09 in the past three months. That hasn't held the shares back, though, with the stock up 17% since early November.

Cummins has a huge conventional engine business that is largely cyclical and dependent on economic conditions. Still, it has been able to gain a big edge over its competition, with rival Navistar International Corp (NYSE:NAV) actually using Cummins engines in order to meet EPA standards for tighter emissions control.

Yet the big growth driver for Cummins is coming from its push into natural-gas-powered engines. On one hand, its partnership with Westport Innovations Inc. (USA) (NASDAQ:WPRT) helped get Cummins started on the path to viable natural-gas engines, with Ford (NYSE:F) having signed on to create F-250 and F-350 trucks using Westport technology. Even Navistar joined up with Clean Energy Fuels Corp. (NASDAQ:CLNE) to encourage trucks using nat-gas engines from Westport and Cummins.

Cummins, however, has gone it alone in an attempt to build its own 15-liter natural-gas engine with Westport's help. That move may threaten Westport's relevance, but for Cummins, it marks an attempt to capture the entire vertically integrated nat-gas engine production cycle, and that could put it in a much stronger position.

Look for signs of how Cummins' various initiatives are going in its quarterly report. The long-term potential of nat-gas engines is far more important than a quarter's worth of earnings.

The article Cummins Earnings: An Early Look originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Clean Energy Fuels, Cummins, Ford, and Westport Innovations. The Motley Fool owns shares of Cummins, Ford, and Westport Innovations.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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