Invesco Ltd. Reduces Stake in Cummins Inc. by 7.5%

Invesco Ltd. has reduced its stake in Cummins Inc. (NYSE: CMI) by 7.5% during the second quarter of 2023, according to a recent filing with the Securities and Exchange Commission (SEC). Following the sale of 91,480 shares, Invesco now holds 1,124,476 shares of Cummins, representing approximately 0.82% of the company, valued at $368,266,000 at the end of the quarter.

The move comes as various institutional investors adjust their positions in Cummins. Notably, Norges Bank acquired a new stake in the company during the same quarter, worth approximately $505,941,000. Additionally, Raymond James Financial Inc. increased its stake by an impressive 152.3% in the first quarter, bringing its total to 1,354,052 shares valued at $424,414,000. Other significant increases include American Century Companies Inc., which raised its holdings by 138.8%, and the Ontario Teachers Pension Plan Board, which boosted its stake by a staggering 5,158.9%.

Analysts have responded to these developments with updated ratings and price targets for Cummins shares. Evercore ISI reaffirmed an “outperform” rating, while Citigroup increased its price target from $500.00 to $530.00. Barclays also adjusted its target from $430.00 to $515.00. As of now, eleven investment analysts have rated Cummins with a Buy rating, whereas seven have issued a Hold rating, leading to an average rating of “Moderate Buy” and a target price of $479.53.

Cummins Stock Performance and Financials

As of the latest trading session, shares of Cummins opened at $510.11. The company’s financial metrics reflect a stable position, with a debt-to-equity ratio of 0.52, a current ratio of 1.77, and a quick ratio of 1.11. Cummins has recorded a one-year low of $260.02 and a high of $515.64, illustrating significant price fluctuations.

Recently, Cummins reported its quarterly earnings, revealing earnings per share (EPS) of $5.59, surpassing analysts’ expectations of $4.83 by $0.76. The company’s revenue for the quarter totaled $8.32 billion, exceeding the consensus estimate of $7.97 billion. Although the revenue reflects a 1.6% year-over-year decline, the net margin stands at 7.95%, showcasing the firm’s profitability.

Equities analysts anticipate that Cummins will post an EPS of $22.54 for the current fiscal year, suggesting a solid outlook despite recent revenue drops.

Dividends and Insider Trading Activity

Cummins has declared a quarterly dividend of $2.00 per share, which was distributed to investors on December 4, 2023. This dividend equates to an annualized payout of $8.00 and a yield of 1.6%. The ex-dividend date was set for November 21, 2023, and the company’s dividend payout ratio currently stands at 41.52%.

In related news, Chief Financial Officer Mark Andrew Smith sold 13,110 shares on November 6, 2023, at an average price of $470.66, totaling $6,170,352.60. Following this transaction, Smith owns 31,582 shares valued at approximately $14,864,384.12. Additionally, insider Brett Michael Merritt sold 1,450 shares on November 25, 2023, for a total of $709,514.00.

Over the past three months, insiders have sold 36,410 shares of Cummins stock worth $16,424,574. Currently, insiders hold 0.41% of the company’s shares, indicating a modest level of insider ownership.

Cummins Inc. operates globally, designing and manufacturing diesel and natural gas engines, electric, and hybrid powertrains, along with related components. The company serves various markets including heavy-duty trucks, construction, and agriculture, and is structured into five segments: Engine, Distribution, Components, Power Systems, and Accelera.

Overall, the adjustments in institutional ownership, significant analyst ratings, and the company’s financial performance indicate a complex landscape for Cummins Inc. as it navigates a challenging economic environment.