Source: Cummins.

Investors have felt the impact of the oil and gas boom far beyond the energy sector itself, as cheap sources of natural gas have enticed companies to look for ways to take advantage of the plentiful fossil fuel. Cummins (NYSE:CMI) has been one of the biggest companies to jump on that opportunity, working to pioneer natural-gas-powered engines for heavy-duty trucks to allow the commercial transportation industry to reap the rewards of cheaper fuel costs. Yet as oil prices have come crashing down, some analysts worry that the incentives to adopt natural-gas engine technology might no longer justify the upfront costs involved. With Cummins set to report its fourth-quarter results on Thursday, shareholders want to see how the engine maker will respond to changing conditions. Let's take an early look at how Cummins has performed over the past quarter and what to expect when it releases its financial report later this week.

Stats on Cummins

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$5.02 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

What's next for Cummins earnings?
Investors have raised their views on Cummins earnings slightly in recent months, boosting their fourth-quarter estimates by $0.03 per share. The stock has held steady during a rocky period for the broader market, with shares falling less than 1% since late October.

Source: Cummins.

Cummins' third-quarter results showed the extent to which the company's growth engines have fired on all cylinders recently. Revenue jumped 15% from the previous year's third quarter, with the company seeing particular strength in the North American market. Cummins' components business produced the most growth, rising 20% as on-highway markets domestically and in Europe and China made up for weakness in the Brazilian market. Moreover, Cummins' engine segment, which is its biggest business, posted gains of 13% from the year-earlier quarter.

What's most interesting about Cummins' recent experience, though, is that the stock has proven immune to a couple of key aspects that have hit competitors in several areas of its business. On one hand, companies like Westport Innovations and Clean Energy Fuels, which have profited in the past from the prospect of greater penetration of natural gas into the transportation system, have lost substantial ground as oil prices plunged, reducing the competitive advantages of gas. Yet on the other hand, heavy-equipment makers like Caterpillar have also come under pressure, as some of the biggest customers of their products have had to cut back on capital spending. Although Cummins is a well-diversified business that can stand up to adverse conditions in one of these arenas, the combination seems like a potential challenge for the company to overcome.

Still, Cummins isn't in the clear just yet. In recent years, the engine segment has seen growth slow and even backtrack from its 2011 levels. With some customers choosing to bring engine production in-house, Cummins needs to demonstrate that it can sustain growth rates in other segments while doing its best to recapture lost business on the engine front.

Source: Cummins.

Moreover, Cummins sees some further trouble ahead internationally. Last month, CEO Tom Linebarger said that the company is still growing its market share in the lucrative Chinese market, but it expects lower infrastructure spending within China. As Linebarger put it, "that's not necessarily great for us," although he still sees a number of potential areas for further growth in China.

In the Cummins earnings report, look to see how the mix between North American results and its international performance pans out. Many investors are taking growth in North America for granted, given the health of the local economy. Yet if Cummins' customers start pulling back from its most innovative natural-gas technologies, then the engine maker's stock could finally start to give way and more closely resemble what we've seen from other companies in the industrial sector.