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Cummins (CMI) Gains But Lags Market: What You Should Know

In the latest trading session, Cummins (CMI) closed at $235.55, marking a +0.03% move from the previous day. This move lagged the S&P 500's daily gain of 1.89%. At the same time, the Dow added 1%, and the tech-heavy Nasdaq gained 10%.

Prior to today's trading, shares of the engine maker had lost 2.16% over the past month. This has was narrower than the Auto-Tires-Trucks sector's loss of 4.76% and lagged the S&P 500's gain of 2.3% in that time.

Wall Street will be looking for positivity from Cummins as it approaches its next earnings report date. This is expected to be February 6, 2023. On that day, Cummins is projected to report earnings of $4.88 per share, which would represent year-over-year growth of 71.23%. Meanwhile, our latest consensus estimate is calling for revenue of $7.36 billion, up 25.81% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for Cummins. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 2.07% lower. Cummins currently has a Zacks Rank of #3 (Hold).

Digging into valuation, Cummins currently has a Forward P/E ratio of 11.48. Its industry sports an average Forward P/E of 13.56, so we one might conclude that Cummins is trading at a discount comparatively.

It is also worth noting that CMI currently has a PEG ratio of 1.26. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Automotive - Internal Combustion Engines stocks are, on average, holding a PEG ratio of 1.26 based on yesterday's closing prices.

The Automotive - Internal Combustion Engines industry is part of the Auto-Tires-Trucks sector. This industry currently has a Zacks Industry Rank of 18, which puts it in the top 8% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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