Cummins (NYSE: CMI) showed some strength in its latest quarterly report, despite falling a little short of last quarter's results. The company continued to post year-over-year growth, with revenues up a solid 16% and profits gaining a much more impressive 33% from the year-ago quarter. However, worrying remarks from CEO N. Thomas Linebarger on "mixed economic conditions" could provide unwelcome headwinds for shareholders in the coming year. Let's take a look at what he and his company's numbers had to say to get a better idea of where this engine maker is headed.

No spin zone
Cummins saw the usual seasonal sales weakness that's cropped up in previous first quarters. However, that didn't stop the company from beating analyst expectations on top and bottom lines. Here's how the company's done in its recent past:

Editorial

Source: Morningstar and corporate earnings report.

First-quarter net income grew to $455 million on sales of $4.47 billion, but many investors fixated instead on what was said during the company's conference call. Linebarger's mixed conditions include an anticipated 5% decline in both Chinese and European revenues, as well as unchanged guidance in Indian and Latin American markets, offset by strong growth in the North American market. Cummins saw its market share in North American engines rise to 45% from 33% last year, shipping 20,000 15-liter engines to set an all-time record. That's much better than competitor Navistar, which stalled out in red ink territory with its own recent earnings.

Revving up a different engine?
Cummins executives had nothing to say about their natural gas engine conversion partnership with Westport Innovations (Nasdaq: WPRT), though one remark stood out by what it didn't say. Linebarger talked up his company's development of an in-house 15-liter nat gas engine, using different technology than its Westport variant. Interest has been "very strong" in the new product, which could be a warning sign for Westport. With Navistar partnering with Clean Energy Fuels (Nasdaq: CLNE) to develop its own nat gas engine technology, the worst news in this report might not be for Cummins but for Westport.

I wouldn't be too worried about Cummins' prospects, unless broader macroeconomic trends turn negative. If that happens, this industrial company will hardly be alone.

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