Latest news with #PowerSystems
CNBC
27-05-2025
- Automotive
- CNBC
Buy this power generation stock for more than 35% upside, Goldman Sachs says
Cummins could see strong demand for its power generation products beyond a growing appetite for data centers, according to Goldman Sachs. Goldman upgraded the engine, power generation and electric vehicle component manufacturer to buy from neutral on Tuesday. The bank also raised its price target to $431 per share from $410, which implies 36% upside from Friday's close. "We see (i) structurally higher Power Systems profitability (pricing structure beyond data center), (ii) derisked EPA 2027 expectations, and (iii) US truck demand expectations that have been significantly reduced while used sleeper inventory levels that are now down 30% yoy," analyst Jerry Revich said. CMI YTD mountain Cummins Inc. stock in 2025. "Cummins has expanded its Power Systems margins over the course of this cycle from a range of 5-10% historically to a 15-20% run-rate and within the context of CAT's ~20% margin for Energy & Transportation. The margin expansion has been driven by a transition to value-based pricing, with capacity and product line expansion for large generators (including data centers) contributing," Revich said. The analyst's bullish call is in concert with a more optimistic view of the machinery sector, which he said is at an inflection point. "Machinery supply is inflecting positively for the first time in three years, new equipment destock is more than halfway complete, margin expectations have been reset embedding tariff headwinds, and valuations appear reasonable on mid-cycle earnings," Revich said. Shares have slipped 9% in 2025 but have gained more than 7% in May. The stock climbed more than 2% following the upgrade. Despite the upgrade, most analysts are cautious on the stock. LSEG data shows 15 of 24 of those covering Cummins rate it a hold, while another eight have a buy or strong buy rating. The average price target implies upside of 11%.
Yahoo
20-05-2025
- Automotive
- Yahoo
CMI Q1 Earnings Call: Power Systems Outperformance and Uncertainty from Tariffs Shape Outlook
Engine manufacturer Cummins (NYSE:CMI) reported Q1 CY2025 results beating Wall Street's revenue expectations , but sales fell by 2.7% year on year to $8.17 billion. Its non-GAAP profit of $5.96 per share was 21% above analysts' consensus estimates. Is now the time to buy CMI? Find out in our full research report (it's free). Revenue: $8.17 billion vs analyst estimates of $8.13 billion (2.7% year-on-year decline, 0.6% beat) Adjusted EPS: $5.96 vs analyst estimates of $4.92 (21% beat) Adjusted EBITDA: $1.46 billion vs analyst estimates of $1.31 billion (17.9% margin, 11.2% beat) Operating Margin: 13.9%, up from 11% in the same quarter last year Free Cash Flow was -$165 million, down from $107 million in the same quarter last year Market Capitalization: $46.08 billion Cummins' first quarter results were shaped by robust performance in its Power Systems segment and strong aftermarket demand, even as core North American truck markets softened. CEO Jennifer Rumsey emphasized the launch of new engine platforms and the acquisition of hybrid retrofit technology as key factors in operational improvement. She noted, 'We achieved impressive results in the first quarter with record financial performance in our Power Systems business,' while cautioning about increasing uncertainty from trade tariffs and regulatory changes. Looking ahead, management withheld full-year guidance due to the evolving impact of tariffs and unclear regulatory timelines, particularly for emissions standards in North America. Rumsey described the environment as highly uncertain, stating, 'The breadth and changing nature of the tariffs have introduced a great degree of uncertainty and mean that at this time, we are unable to predict with confidence our expected performance for the year.' The company is closely monitoring demand trends across segments, with particular focus on aftermarket strength and the timing of new product introductions. Management attributed the quarter's profitability to a combination of operational improvements, segment-specific momentum, and proactive pricing, while also flagging near-term risks from trade policy and regulatory uncertainty. Power Systems Margin Expansion: Operational enhancements and broad-based demand—especially in data centers, mining, and rebuilds—drove record profitability, with aftermarket sales exceeding expectations. Aftermarket and Pricing Gains: Aftermarket volumes increased across several segments, supported by successful price increases and cost control, notably within the engine and distribution businesses. Data Center Demand: Accelerating demand for data center backup power in both the U.S. and China contributed to growth, but management clarified that aftermarket strength was broad-based and not solely tied to this market. Product Launches and Acquisitions: The introduction of the X10 and B7.2 engine platforms and the acquisition of First Mode's retrofit hybrid technology for mining/rail reinforced Cummins' focus on decarbonization and product renewal. Tariff and Regulatory Complexities: Management highlighted that tariffs had minimal impact in Q1 but expect growing effects in future quarters, particularly as inventory and supply chain mitigation options diminish. They also noted ongoing uncertainty around 2027 emissions regulations and the potential for additional tariffs under Section 232 investigations. Management's outlook is shaped by the potential duration and scope of tariffs, regulatory changes, and mixed demand signals across end markets, all of which introduce significant unpredictability for the remainder of the year. Tariff Uncertainty: The evolving landscape of U.S. and international tariffs is expected to impact both costs and demand, with management planning to pass on costs where possible but acknowledging some lag and risk to overall economic activity. Regulatory Timeline: Pending emissions regulations in North America create uncertainty for new product adoption and customer purchasing decisions, with the 2027 NOx rule and potential changes to greenhouse gas standards being closely monitored. Aftermarket and Power Systems Resilience: Management views the Power Systems and aftermarket segments as having more predictable multi-year demand, with the ability to reallocate orders if needed, while on-highway engine and components businesses remain exposed to cyclical swings. Jamie Cook (Truist Securities): Asked about the quantifiable impact of tariffs and visibility by segment; management declined to provide specifics, citing ongoing uncertainty and noted actions to mitigate and pass on costs. Jerry Revich (Goldman Sachs): Inquired if Power Systems margins are sustainable and about regulatory impacts on engine platforms; management said margins reflect underlying improvements but may fluctuate with demand and regulatory clarity. Angel Castillo (Morgan Stanley): Sought detail on near-term tariff effects and aftermarket drivers; management stated tariff impacts were immaterial in Q1 but will grow, and aftermarket strength is broad-based, not just data center-driven. Tim Thein (Raymond James): Probed on expectations for parts demand and joint venture income; management expects parts demand to remain resilient but noted joint venture income could be lumpy and may moderate. David Raso (Evercore ISI): Questioned whether demand concerns stem from actual price pushback or general macro uncertainty; management attributed order caution to broader economic and regulatory uncertainties rather than direct price resistance. In the coming quarters, the StockStory team will be tracking (1) the impact of newly enacted and potential tariffs on both costs and order volumes as mitigation strategies phase out, (2) the pace and outcome of regulatory developments around 2027 emissions standards and Section 232 investigations, and (3) sustained strength in Power Systems and aftermarket demand, including the adoption of new engine platforms and decarbonization technologies. Execution on these fronts will be critical for assessing Cummins' resilience in a volatile environment. Cummins currently trades at a forward EV-to-EBITDA ratio of 11.5×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. 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Yahoo
11-02-2025
- Automotive
- Yahoo
Cummins Acquires First Mode Assets for Decarbonization Leadership in Mining
COLUMBUS, Ind., February 11, 2025--(BUSINESS WIRE)--Cummins Inc. (NYSE: CMI) today announced the acquisition of assets of First Mode, a leader in retrofit hybrid solutions for mining and rail operations. The acquisition includes hybrid mining and rail product lines, and the full IP portfolio which includes hydrogen and battery powertrain solutions. This technology represents the first commercially available retrofit hybrid system for mining equipment, significantly reducing total cost of ownership (TCO) while advancing decarbonization in operations. In addition, Cummins is acquiring First Mode's commercial portfolio, manufacturing and technical teams in Australia, the United States and Chile. First Mode will continue to serve customers through the transition and is dedicated to meeting customers' needs by shipping product in Q1. This acquisition reinforces Cummins' commitment to providing innovative and effective decarbonization solutions and will allow the company to elevate our product portfolio while meeting the needs of our customers on their transition to a lower-carbon future. First Mode will operate within the Power Systems industrial segment. "This acquisition is an important step forward in our goal to lead our Power Systems customers through the energy transition," said Jenny Bush, President of Power Systems at Cummins. "With First Mode's hybrid retrofit technology, we are accelerating our ability to provide decarbonization solutions that meet miners' need to drive down operating costs today." A Broader Commitment to Carbon Reduction Cummins is at the forefront of developing multiple technology pathways to help the mining industry transition to a sustainable future. Through product hybridization and clean fuels such as ethanol and methanol, Cummins is developing bridge technologies that enable miners to maximize the life of existing fleets while reducing carbon emissions. "Cummins' dedication to partnering with original equipment manufacturers (OEMs) and miners ensures that these technologies are developed and tested in real-world environments," Bush added. "With hybrid retrofit kits, modular component upgrades and scalable solutions, we are bringing miners the flexibility and confidence they need to decarbonize operations while adapting to evolving technologies and infrastructure." With its vast global service network, Cummins is prepared to support newly developed bridge technologies, ensuring seamless integration and ongoing support for mining and rail applications. About Cummins Inc. Cummins Inc., a global power solutions leader, is comprised of five business segments – Components, Engine, Distribution, Power Systems and Accelera by Cummins – supported by our global manufacturing and extensive service and support network, skilled workforce and vast technological expertise. Cummins is committed to its Destination Zero strategy, which is grounded in the company's commitment to sustainability and helping its customers successfully navigate the energy transition with its broad portfolio of products. The products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, hydrogen production technologies and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 75,500 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $735 million on sales of $34.1 billion in 2023. See how Cummins is powering a world that's always on by accessing news releases and more information at View source version on Contacts Melinda Koski Director, External Communications Lauren Daniel Manager, External Communications Sign in to access your portfolio
