Canaccord Genuity Morning Coffee on Cummins (CMI) and Westport (WPRT): Backfired

July 11, 2012 10:16 AM EDT
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Canaccord Genuity Morning Coffee on Cummins (NYSE: CMI) and Westport (Nasdaq: WPRT): Backfired.

U.S. engine maker Cummins announced a hike in its quarterly dividend payout, but its lowered 2012 forecast sent shares spiraling lower. The company said it now expects second-quarter revenues of around $4.45 billion, which would badly miss Wall Street’s outlook of $5.07 billion. For the full year 2012, Cummins sees revenues to be flat from 2011. It had previously expected a 10% gain in revenue. Cummins CEO Tom Linebarger said, “Order trends in the U.S. for trucks and power generation equipment have softened and demand in Brazil, China and India is not improving as we had previously expected.” Meanwhile, shares of Westport fell in sympathy with Cummins. Westport and Cummins have a 50/50 joint venture that provides natural gas vehicle engines (and related technology) ranging from 150 hp to 320 hp (truck and bus; CNG, LNG, biomethane) available in up to 60 OEM vehicles. On a positive note, Cummins lifted its quarterly dividend payout by 25%. The new dividend of $0.50 per share (up from a prior $0.40) is payable on September 1, 2012 to shareholders of record on August 22, 2012.

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