Cummins 2025 Q1 Earnings Misses Targets as Net Income Declines 58%

Cummins Inc. (CMI) reported its fiscal 2025 Q1 earnings on May 05th, 2025. The company missed revenue expectations, reporting $8.17 billion compared to the anticipated $8.19 billion. Despite this, cummins exceeded earnings per share (EPS) forecasts, achieving $5.96 against the expected $4.85. Due to economic uncertainty driven by tariffs, the company has withdrawn its full-year forecast, focusing on cost management and capital optimization until conditions stabilize.

Revenue
Cummins reported a revenue decline of 2.7% in Q1 2025, totaling $8.17 billion, down from $8.40 billion in Q1 2024. The Engine segment generated $2.77 billion, while Components contributed $2.67 billion. Distribution saw a surge to $2.91 billion. The Power Systems segment recorded $1.65 billion in revenue, with Accelera adding $103 million. Intersegment eliminations amounted to $-1.93 billion, leading to a total of $8.17 billion.

Earnings/Net Income
EPS fell significantly by 57.5% to $5.99 in Q1 2025 from $14.10 in Q1 2024. Correspondingly, net income plunged 58.1% to $850 million, compared to the $2.03 billion reported in Q1 2024. The substantial drop in EPS reflects challenging economic conditions impacting Cummins' profitability.

Post-Earnings Price Action Review
Cummins stock exhibits a positive correlation between earnings report metrics such as revenue, net income, and EPS with stock price movements. Historical analysis shows that the stock tends to perform well in the short term following earnings reports. Revenue impact yields win rates of 52.83% over 3 days, 55.15% over 10 days, and 54.75% over 30 days, with maximum returns of 5.53% observed in the 30-day period. Similarly, net income and EPS reflect positive influences on stock prices, albeit slightly lower than revenue's impact. Overall, investors might consider these metrics when evaluating the potential effects on Cummins stock following earnings releases.

CEO Commentary
Jennifer Rumsey, Chair & CEO, highlighted Cummins' strong Q1 2025 results, emphasizing record performance in the Power Systems segment. Despite these achievements, she noted significant uncertainty due to trade tariffs affecting future performance. Rumsey reaffirmed the company's robust strategic and financial position, expressing optimism about restoring guidance with improved economic stability and focusing on innovative product development.

Guidance
Due to economic uncertainty and trade tariff impacts, Cummins is withholding formal guidance for the year. The company is concentrating on cost management and optimizing working capital until more stable conditions emerge, which will allow for reinstating specific revenue and earnings projections.

Additional News
In February, Cummins acquired assets from First Mode, enhancing its hybrid solutions for mining and rail operations. This acquisition includes hybrid mining and rail product lines, alongside hydrogen and battery powertrain solutions, marking the first commercially available retrofit hybrid system for mining equipment. Cummins also unveiled the Cummins B7.2 diesel engine, which incorporates advanced technology and flexibility for various applications, set for production in North America by 2027. Furthermore, Accelera by Cummins announced a significant supply of a 100-megawatt proton exchange membrane electrolyzer system for bp’s Lingen green hydrogen project in Germany, to be manufactured in Spain and commissioned by 2027.

Ask Aime: How can I invest in Cummins after their Q1 earnings report?