Cummins Inc. (CMI): One Solid Reason to Buy This Stock if It Falters on Earnings

Will gas help it rise?

In this bleak scenario, it’s natural for Cummins to pin hopes on its partnership with natural-gas engine technology expert Westport Innovations Inc. (USA) (NASDAQ:WPRT). One of their most awaited 12 liter engines, ISX 12G is slated to go into full production in April. Both companies are banking big on this highly-advanced offering. Cummins-Westport’s engine shipments slipped 35% in the fourth quarter, but shipments to the North American truck market were up an impressive 52%, suggesting wider acceptance of natural-gas engines by truck makers.

Westport expects 21% growth in revenue this year riding on robust demand from the heavy-duty truck market, which bodes well for Cummins. Meanwhile, Cummins’ own 15-liter engines are doing well in test runs though Cummins is unlikely to launch it before 2015. PACCAR didn’t sound optimistic about natural gas in its last earnings call, but I’d like to hear it from Cummins. Look for Cummins’ outlook and plans for the natural gas market in it upcoming report.

The Foolish bottom line

Beating Street estimates won’t be easy for Cummins Inc. (NYSE:CMI). An improvement in full-year guidance could push its shares up, but that’s unlikely considering how weak the key product and geographic markets are.

Yet, investors shouldn’t be disheartened, because any drop in Cummins’ stock price will be a golden opportunity to get your hands on what’s been dubbed as America’s best company by The Motley Fool. You certainly wouldn’t want to miss out such a company’s earnings announcements and future growth plans. To stay updated, click here to add Cummins to your stock watchlist.

The article 1 Solid Reason to Buy This Stock if It Falters on Earnings originally appeared on Fool.com.

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