Cummins Inc. (NYSE:CMI) announced that it has entered into an accelerated share repurchase (ASR) agreement with Goldman, Sachs & Co. (GS &Co.) to repurchase $500 million of Cummins’ common stock. Today’s ASR is part of Cummins’ previously announced share repurchase plans authorized by the Board of Directors.
Under the terms of the ASR agreement, Cummins will repurchase $500 million of its common stock from GS &Co. with an initial delivery of approximately 4 million shares based on current market prices. The final number of shares to be repurchased will be based on Cummins’ volume-weighted average stock price during the term of the transaction, less a discount. The ASR is expected to be completed by the end of the second quarter of 2016.
“This $500 million ASR agreement reflects our view that the Company’s shares are currently trading well below intrinsic value, and is consistent with our plans to return 75 percent of Operating Cash Flow to shareholders in 2016,” said Chairman and CEOTom Linebarger. (Original Source)
Shares of Cummins closed yesterday at $98.43. CMI has a 1-year high of $146.13 and a 1-year low of $79.88. The stock’s 50-day moving average is $88.31 and its 200-day moving average is $104.54.
On the ratings front, Cummins has been the subject of a number of recent research reports. In a report issued on February 5, Deutsche Bank analyst Vishal Shah reiterated a Hold rating on CMI, with a price target of $93, which implies a downside of 5.5% from current levels. Separately, on February 4, William Blair’s Lawrence De Maria reiterated a Hold rating on the stock and has a price target of $95.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Vishal Shah and Lawrence De Maria have a total average return of -21.1% and -7.7% respectively. Shah has a success rate of 23.7% and is ranked #3530 out of 3556 analysts, while Maria has a success rate of 30.8% and is ranked #3029.
The street is mostly Neutral on CMI stock. Out of 7 analysts who cover the stock, 4 suggest a Hold rating , 2 suggest a Sell and one recommends to Buy the stock.
Cummins Inc designs, manufactures, distributes and services diesel and natural gas engines, electric power generation systems and engine-related component products.