(CMI) - Company's quarterly dividend was increased by 20%

Cummins, Inc. (CMI), a Zacks #1 Rank stock, beat the Street's earnings estimate in 10 out of the past 11 quarters. After posting impressive results for the second quarter of 2006, the company boosted its full-year earnings per share guidance. The Board of Directors recently upped its quarterly dividend by 20% and authorized a new share repurchase program. The company has a price-to-book ratio of 2.2, compared to 5.3 for the market. CMI's PEG ratio currently sits at 0.58. Full Analysis Cummins, Inc. designs, manufactures, distributes and services diesel and natural gas engines, electric power generation systems and engine-related component products. The company serves customers in more than 160 countries through its network of 550 company-owned and independent distributor facilities and more than 5,000 dealer locations. CMI exceeded analysts' earnings expectations in 10 out of the past 11 quarters by an average margin of 13.9%. On Jul 27, the company reported second-quarter profits of $3.83 per share, topping the Street's estimate by 5.5%. Compared to the prior-year period, earnings soared 35.3%. Revenues came in at $2.84 billion and represented a 14.1% jump from the $2.49 billion achieved in the second quarter of 2005. Chairman and Chief Executive Officer Tim Solso stated, “We had a terrific second quarter and remain on pace for a record 2006. Our markets are strong around most of the world, we are winning new business and we continue to serve our customers well.” The Board of Directors recently made two important announcements. The company's quarterly dividend was increased by 20% to 36 cents from 30 cents per share. Moreover, the Board authorized the repurchase of up to 2 million shares of CMI's common stock. The company completed its previous $100 million buyback in June. Thanks to a solid second quarter, CMI upped its 2006 earnings per share guidance to between $14.00 and $14.20. The company's prior outlook called for profits between $12.40 and $12.60 per share. Earnings per share over the next 3-5 years are expected to grow 14%—in line with the forecasted growth rate of the industry. CMI is currently trading at a valuation of 9.6x trailing 12-month earnings and at 8.4x current fiscal-year estimated earnings. The market, as represented by the S&P 500, is trading at a valuation of 16.9x trailing 12-month earnings and at 15.9x its current fiscal-year estimated earnings. The company has a price-to-book ratio of 2.2, compared to 5.3 for the market. CMI's PEG ratio currently sits at 0.58. The company's return on equity of 31%, a common measure of profitability, is in line with the industry average. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions. | Blog Home| VitalStocks Home