Cummins stock reaches all-time high after truck deal

Cummins Inc. stock reached an all-time high after the Columbus-based company announced a deal to supply engines for truck maker Hino Trucks.

Cummins’ stock briefly traded at $276 on Monday — the highest price in the company’s history — before closing at $275.99.

The all-time high came three days after Hino Trucks said it plans to start making medium- and heavy-duty trucks with Cummins engines for the North America market by the end of the year, the two companies said.

Hino Trucks plans to offer Cummins B6.7 and L9 engines in Hino’s L and XL Series model trucks with production expected to start in October at Hino Trucks facilities in West Virginia and Canada.

The engines will be made at Cummins’ Rocky Mount Engine Plant in North Carolina, Cummins officials said.

Hino Trucks, a Toyota Group company headquartered in Michigan, describes itself as the third largest truck manufacturer in the world, according to the company’s website.

“The Cummins B6.7 and L9 have an unmatched legacy in the medium-duty space with nearly 80 years of combined production history,” Amy Boerger, Cummins’ vice president and general manager, North America On-Highway, said in a statement. “We are confident Hino customers with Cummins engines will continue to enjoy low cost of operation ownership with our combined offering.”

Cummins’ stock price has been “on a tear” over roughly the past year, more than doubling in value, said Roger Lee, senior research analyst at Columbus-based Kirr, Marbach and Co.

“…It kind of just added a little fuel to the mix,” he said.

By comparison, Cummins stock closed at $116.48 on March 16, 2020, and $221.37 on Jan. 4, the first day of trading this year.

Lee said one of the driving forces behind the increase in the value of Cummins shares is an overall “positive sentiment” surrounding the company.

Cummins has outperformed Wall Street expectations in recent quarters and inked several deals with major truck makers over the past several weeks, including agreements with Germany-based Daimler Trucks and Japan-based Isuzu Motors Limited.

“(The Hino deal) kind of just fueled the positive sentiment that’s going on,” Lee said.

Last month, Cummins announced it had signed a memorandum of understanding with Germany-based Daimler Trucks AG that includes producing medium-duty engine systems beginning in the second half of the decade.

As part of the partnership, Cummins will establish an engine plant in Germany to produce medium-duty engines for Mercedes-Benz, the companies said.

Cummins also said it will use its existing production and supply chain networks in other regions of the world for other Daimler Trucks brands, including those of Daimler Trucks North America.

In February, Cummins reported its first quarterly revenue increase since the second quarter of 2019 with $5.8 billion in revenues during the fourth quarter of 2020, a 5% increase from the same quarter the year before.

The company’s year-end revenue, however, was down 16% compared to 2019 due to the COVID-19 pandemic, but local analysts said the results were “extremely great given the circumstances.”

“You have a company that proved they can hang in their when things are bad, and then they did way better than everyone expected coming out of it,” Lee said. "… They did a lot of cost-cutting even before COVID, and they were quick to address COVID early on. So they were able to position themselves for the weakness (in the market), and with that, now that we have the market rebounding, their margins are going to be much stronger.”

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Cummins’ stock closed at $275.99 Monday, up $2.07 from its Friday close of $273.92.

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