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Cummins Inc. Message Board

  • mycharitabletrust mycharitabletrust Mar 20, 2013 12:24 AM Flag

    CMI getting a big Upgrade today at William Blair 03-20

    To Outperform. Target is raised $140

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Looks like ole William missed the ENTIRE move from $80 to $120...Brilliant analysis!

    • Avg. earnings estimate is 22% BELOW same quarter last year and next quarter is similar. What would be the catalyst for such massive multiple expansion?

      • 1 Reply to hertsisitsrealname
      • The total year average analyst's estimate is up about 2% for the year, so the estimates are back loaded for 2013. Given that the entire market is going higher, multiple expansion would be based on comparison to other investments, particularly treasuries. However, since the target is based on where the stock price will be in one year, I think that it is the 2014 estimate of $10..31 vs. $8.78 in 2013 that they are looking at. That would be a 17% increase and give a forward PE of 13.57 based on a $140 stock price. The stock is now trading at 13.4X earnings. So the margin expansion has already happened and it their estimate of earnings that are driving the $140.

        Another thing to look at is that CMI management is very conservative with their forecasts. They under promise and over deliver. Last year they beat the consensus every quarter and for the total year by 61 cents or 7.5%. Whether all this will happen is another story; however, the analyst's did not pull this number out of the air.

        Sentiment: Hold

145.11+0.36(+0.25%)Aug 29 4:00 PMEDT

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