Cummins: A Powerhouse DRIP


Jimmy Mengel Image Jimmy Mengel Editor, Outsider Club

Cummins Inc. (CMI) has been in the portfolio since June 2015 and has been quietly chugging along as one of our DRIP positions, notes Jimmy Mengel, a dividend reinvestment specialist and editor of The Crow's Nest.

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The company isn’t one that most people have heard of. You basically have to either work with trucks, trains, generators, or large machinery to be exposed to it.

In that arena, it is a powerhouse. It designs, manufactures, distributes, and services diesel and natural gas engines, along with components for filtration, after-treatment, turbochargers, fuel systems, controls systems, air handling systems, and electric power generation systems.

Cummins earned $1.39 billion on sales of $17.5 billion in 2016. It also fully rebounded from share price losses in 2015 and has since gone on to outpace the S&P 500 by about 5% year to date in 2017.

This steady year-and-a-half march has been driven by relatively solid numbers, a rising tide in the broader market, and widespread expectation of increased infrastructure spending in North America, India, and China.

We saw some of that in the 1Q 2017 earnings report, with a 7% year-over-year revenue increase. International sales were up 17%, primarily from China and Europe.

However, in the second-quarter, CMI earned  $2.53, below the $2.58 per share analysts expected.