CMI – Cummins’ (CMI) Spinoff Atmus Makes Impressive Trading Debut
Atmus Filtration Technologies Inc., a spinoff of Cummins (CMI – Free Report) , made its trading debut on May 26 at the New York Stock Exchange after successfully raising $275 million in an initial public offering (IPO). Carrying the ticker ATMU, Atmus’ shares witnessed a substantial 11% increase on the first day of trading, providing investors with a promising start and suggesting a bright future for the company as it embarks on its independent journey in the market.
This article explores the positive market response to Atmus and delves into the company’s product offerings, financial performance and position within the industry.
Market Debut and Performance
Atmus’ IPO was priced in the middle of the marketed range, demonstrating confidence from investors. Initially sold at $19.50 per share, shares of Atmus opened at $21.67 on May 26, closing the day at $21.65. This performance resulted in a market value of $1.8 billion for the Nashville-based company.
The successful listing ranks as the seventh-largest IPO on a U.S. exchange this year, contributing to an increasingly favorable market environment following a sluggish first quarter, the slowest since 2016, per data compiled by Bloomberg. The listing of Atmus follows the recent successful trading debut of Kenvue Inc., a spinoff of Johnson & Johnson’s consumer health products division. Kenvue’s $4.37 billion IPO, the only offering to surpass $1 billion this year in the United States, further reinforces the improving market sentiment.
Product Portfolio and Global Reach
Atmus specializes in Fleetguard products, encompassing fuel, air, hydraulic and other filters for a diverse range of applications such as commercial vehicles, agriculture, construction, mining and power-generation equipment. With its presence in 150 countries, the company derived 51% of its net sales from the United States and Canada in 2022. This global reach positions Atmus to capitalize on the increasing demand for filtration solutions across various industries.
Under the umbrella of Cummins, Atmus has demonstrated consistent growth in net sales over the past three years. From $1.23 billion in 2020, the company’s net sales rose to $1.56 billion in 2022. Moreover, Atmus achieved $170 million in net income for 2022, representing a 19% increase from 2020. While the net income decreased slightly from the previous year, the company has managed to navigate challenging market conditions rather well.
Cummins’ Continued Control and Key Stakeholders
Cummins — currently carrying a Zacks Rank #3 (Hold) — remains the majority owner of Atmus, owning 83% of the company’s shares. This ensures that Cummins retains control over Atmus, safeguarding its strategic interests and facilitating future growth opportunities. The IPO involved a debt-for-equity exchange between Atmus and leading financial institutions Goldman Sachs Group Inc. and JPMorgan Chase & Co., highlighting the confidence of these key stakeholders in the company’s potential.
The impressive market debut of Atmus Filtration Technologies following its successful IPO reflects investor optimism and growing market sentiment. With a diverse product portfolio and a global presence, Atmus is well-positioned to capitalize on the increasing demand for filtration solutions. The company’s consistent financial performance and Cummins’ majority ownership further contribute to its growth prospects. As the market continues to recover and expand, Atmus appears poised to carve out a prominent position within the industry and deliver value to its shareholders.
Key Picks From Auto Space
General Motors (GM – Free Report) : One of the world’s largest automakers, General Motors held the largest share of the U.S. auto market at 16% in 2022. General Motors’ compelling portfolio with strong demand for its quality full-size pickups and SUVs bode well. The automaker plans to roll out 30 fresh electric vehicles (EV) models by 2025-end.
The Zacks Consensus Estimate for GM’s 2023 sales implies 4.5% growth year over year. The consensus mark for 2023 EPS has moved north by 39 cents over the past 30 days. The company currently sports a Zacks Rank #1 (Strong Buy).
Ford (F – Free Report) : General Motors’ crosstown rival Ford is one of the leading automakers in the world. A strong vehicle mix supported by F-series trucks and SUV models, combined with a robust EV lineup, should drive Ford’s growth.Ford’s EV lineup — with Mustang Mach-E, E-Transit and F-150 Lightning — is set to fuel sales.
The Zacks Consensus Estimate for F’s 2023 sales implies 7.6% growth year over year. The consensus mark for 2023 EPS has moved north by 17 cents over the past 30 days. The company currently sports a Zacks Rank #1.
Allison Transmission (ALSN – Free Report) : Allison is a manufacturer of fully-automatic transmissions for medium and heavy-duty commercial and heavy-tactical U.S. defense vehicles.Allison’s strategic buyouts, frequent product launches and investor-friendly moves are expected to boost long-term prospects.
The Zacks Consensus Estimate for ALSN’s 2023 sales implies 7.5% growth year over year. The consensus mark for 2023 EPS has moved north by 55 cents over the past 30 days. The company currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.