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Cummins (CMI) Gains Stake in Exergy Energy for Grid Programs

Cummins Inc. CMI recently announced that it has obtained a minority stake in Exergy Energy, LLC.

The partnership will enable the installation of Cummins power system solutions such as generator sets, energy storage systems and switching equipment at the customer location to provide power to the entire operation at the time of grid outages or times of peak usage. A big advantage of the collaboration is that it does not entail any upfront capital investment by the customer. Exergy Energy’s avant-garde software has the potential to track the grid such that during peak usage periods, it automatically shifts the loads to the backup power system. This avoids an outage or peak demand charges.

Exergy Energy, the software and asset management firm, installs, owns and operates backup generator sets. The sets can power an entire load of a facility during times of power outages and peak utility usage. Its platform is an innovative solution that ensures that sustainability can be provided at the lowest cost in a single package.

As owner of the asset, Exergy Energy is responsible for the capital investment, service and maintenance and managing participation in grid programs. It generates secondary revenues by participating in grid-sponsored programs. It shares a portion of the cash flows generated from the programs with its customers, which covers some or all of the costs associated with the program. At the end of the contract, ownership of the backup power system is handed over to the customer.

Cummins is driven to help its customers meet their sustainability goals. Many organizations struggle to find solutions to grid power problems, hindered by the upfront capital expense of a generator set and power system components, coupled with the complexity of participating in grid services. Through Exergy Energy, Cummins is contributing to making the process simple by removing the cost barriers of installing and operating a backup generator owing to an economized framework.

Cummins is the largest engine producer in the world and maintains a diverse global footprint. Its position as a global power leader with a dominant market and commitment to moving toward a carbon-neutral future is commendable. The impressive product portfolio, strong geographic diversification and broad global distribution network will boost its long-term prospects. The company's leadership in key technologies for zero tailpipe emissions in commercial and industrial applications and additional efforts to strengthen its foothold in the domain augur well.

Zacks Rank & Key Picks

CMI currently has a Zacks Rank #3 (Hold).

Here are some better-ranked players in the auto space –CarParts.com PRTS, sporting a Zacks Rank #1 (Strong Buy), and Allison Transmission Holdings ALSN and Genuine Parts Company GPC, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

CarParts has an expected earnings growth rate of 85% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 72.7% upward over the past 30 days.

Allison has an expected earnings growth rate of 26.1% for the current year. The Zacks Consensus Estimate for ALSN’s current-year earnings has been revised 4% upward in the past 30 days.

Genuine Parts has an expected earnings growth rate of 18.1% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 2.5% upward over the past 30 days.


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