Insider Activity Report: Cummins (CMI)

William Fisher, a director at Cummings (CMI), recently bought 562 shares. The buy increased his position by 111 percent, and came to a total cost of $149,810.

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  • This marks the first insider buy at the company over the past two years. Company insiders have largely been sellers of shares following the exercise of stock options, with sales sometimes ranging as high as over $13 million from the company’s Chairman.

    Overall, Cummins insiders own 0.4 percent of shares.

    The engine manufacturer is up 7 percent over the past year, significantly underperforming the overall market. Weakness in the energy space and slowing vehicle sales weighed on profitability.

    Revenues are up 10 percent over the past year, but Cummins has not been consistent about turning a profit. That’s resulted in shares trading at 50 times earnings.

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  • Action to take: Cummins could fare better on an expanding economy, and could benefit as interest rates start to decline later in the year. That could make for a speculative buy now, and may explain why shares have started to rally in recent weeks.

    At current prices, Cummins pays a 2.5 percent dividend.

    For traders, the uptrend in shares is likely to continue. The June $290 calls, last trading for about $6.75, could see mid-double-digit returns if the current rally continues in the coming months.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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