The first half of 2012 is in the rearview mirror, and investors are gearing up for what looks to be an action-packed ending. There are bound to be some big winners -- and more than a few duds -- no matter what happens in the United States and abroad.
Will your favorite stock have its victory lap as we hit the home stretch, or will it get lapped? First-half performances can hold some clues, so let's look to the recent past to find out whether Cummins
Cummins got off to a great start in 2012, roaring to a 40% gain by mid-March. It was all downhill from there. The engine maker's been on a long slide back to zero, which it passed on its way to a loss for the year earlier this month:
Here are a few financial snapshots of its recent performance:
|Market Cap||$16.6 billion|
|TTM Revenue||$18.66 billion|
|TTM Net Income||$1.96 billion|
|TTM Free Cash Flow||$1.28 billion|
|MRQ Revenue||$4.47 billion|
|MRQ Net Income||$455 million|
|MRQ Free Cash Flow||($121 million)|
|MRQ Revenue / Net Income Year over Year Change||15.9% / 32.7%|
|P/E and Forward P/E||8.5 / 7.5|
|Price to Free Cash Flow||13.0|
|Motley Fool CAPS Rating (out of 5)||***** (find out more)|
Source: Morningstar. TTM = trailing-12-month. MRQ = most recent quarterly.
What the numbers don't tell you
Cummins got off to a strong start in 2012, with a strong fourth-quarter showing putting wind into the company's sails. The biggest moves of the winter, however, came a bit earlier. A string of major natural gas trucking announcements, which began just as Cummins boosted its guidance, helped a slew of related companies strike out for greater gains. Most of them, anyway:
But just as the rising tide of nat-gas growth seemed destined to lift everyone's boats, Congress punched a hole in their hulls by turning aside a tax incentive amendment for nat-gas truck purchases. It's been mostly downhill for Cummins (as well as the other three major players) ever since.
Not even truck builder PACCAR's
Cummins' first-quarter results, despite great bottom-line growth, only continued the bleeding thanks to underwhelming forward estimates from top brass. The latest guidance cuts, released just last week, seem to confirm what the market's been anticipating for months -- Cummins has some serious macroeconomic headwinds to contend with.
The biggest questions ahead won't be about nat-gas engines. Instead, investors will have to ask themselves just how bad they feel the global economy could get. If a recession hits like a ton of BRICs (pardon the pun), Cummins will be in the same situation as many of its heavy-equipment peers. Few companies will want to buy new trucks when they're worrying about whether or not they can even pay their bills.
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