Cummins (CMI) AI Stock Analysis

• Market Cap: $38.81B
• Dividend Yield: 2.53%
• Average Volume (3M): 1.08M
• Price to Earnings (P/E): 9.9
• Beta (1Y): 1.06
• Revenue Growth: 0.14%
• EPS Growth: 444.36%
• Country: US
• Employees: 69,600
• Sector: Industrials
• Sector Strength: 70
• Industry: Industrial - Machinery
• EPS (TTM): 28.17
• Shares Outstanding: 137,742,580
• 10 Day Avg. Volume: 1,206,905
• 30 Day Avg. Volume: 1,077,596
• PEG Ratio: 0.02
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.30
• Price to Cash Flow (P/CF): 7.80
• P/FCF Ratio: 7.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $363.62
• Price Target Upside: 27.19% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 13

Cummins' strong profitability and strategic advancements drive its stock appeal, supported by robust financial health and promising future guidance despite market challenges. The technical analysis indicates caution due to current bearish trends, while the valuation remains attractive, balancing risk and reward for potential investors.

Positive Factors

Financial Performance

Cummins reported another strong set of results for 4Q24, with adjusted EPS of $5.16 coming in well ahead of consensus of $4.65.

Margin Expansion

The margin expansion story is continuing to build, which is accentuated by CMI expecting to grow margins in its Engine segment through operational improvement.

Strategic Investments

CMI remains committed to getting in front of the long-term BEV transition, as it completed the formation of its Amplify JV for domestic battery cell manufacturing with PCAR and Daimler.

Negative Factors

Customer Demand

CMI has seen some slowing in customer demand and uncertainty around incentives in its Accelera business.

Order Weakness

Medium duty orders are surprisingly weak with production forecasts down by 20% in 2025.

Regulatory Uncertainty

There is a risk that emissions uncertainty may delay fleet purchases, affecting the truck recovery thesis.

Cummins Business Overview & Revenue Model

Company Description

Cummins Inc. is a global leader in the design, manufacture, distribution, and servicing of a broad range of power solutions. The company operates in various sectors, including engines, power systems, components, and distribution. Cummins' core products include diesel and natural gas engines, hybrid and electric platforms, as well as power generation systems, batteries, fuel systems, controls, air handling, filtration, emission solutions, and electrical power systems. With a strong commitment to innovation and sustainability, Cummins serves customers across diverse industries such as automotive, marine, rail, and construction.

How the Company Makes Money

Cummins Inc. generates revenue through several key streams. The largest portion of its revenue comes from the sale of engines and related components to original equipment manufacturers (OEMs) and distributors worldwide. This includes advanced diesel and natural gas engines for on-highway and off-highway vehicles. Another significant revenue stream is the power systems segment, which includes sales from generators and alternative energy solutions, such as hybrid and electric power products. Additionally, Cummins earns from its components segment, which offers after-treatment systems, turbochargers, and filtration products. The distribution segment provides aftermarket services and parts sales, enhancing customer support and extending product lifecycles. Cummins has established significant partnerships with OEMs and other industry players to expand its market reach and leverage its technological advancements, contributing to its overall earnings growth.

Cummins Financial Statement Overview

Summary

Cummins shows strong profitability with a significant net profit margin improvement and stable revenue growth. The balance sheet is robust with prudent leverage and high ROE, although cash flow management indicates room for improvement.

Income Statement

Cummins demonstrates strong profitability with a consistent gross profit margin of around 24.6% for TTM (Trailing-Twelve-Months). The net profit margin improved significantly to 11.6% from 2.2% the previous year, showcasing enhanced cost efficiency and profitability. Revenue growth is stable, with a slight increase of 0.1% in the TTM compared to the previous year, indicating steady demand in its market. The EBIT and EBITDA margins also show a healthy improvement, indicating strong operational performance.

Balance Sheet

Cummins maintains a stable financial position with a debt-to-equity ratio of 0.65, reflecting prudent leverage levels. The return on equity (ROE) stands at an impressive 38.4% for TTM, highlighting effective use of shareholder funds to generate profit. The equity ratio is a solid 32.6%, suggesting a balanced capital structure and strong asset base.

Cash Flow

The operating cash flow to net income ratio is 0.38, indicating a moderate conversion of income to cash flows. However, the free cash flow growth rate is marginal at 1.3%, signaling limited growth in cash generation. The free cash flow to net income ratio of 0.07 suggests room for improvement in cash flow management.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
34.10B	34.06B	28.07B	24.02B	19.81B
	Gross Profit
8.44B	8.25B	6.72B	5.70B	4.89B
	EBIT
3.75B	1.76B	2.23B	2.71B	1.76B
	EBITDA
6.34B	3.02B	3.80B	2.86B	3.13B
	Net Income Common Stockholders
3.95B	735.00M	2.15B	2.13B	1.79B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.26B	2.74B	2.57B	3.19B	3.86B
	Total Assets
31.54B	32.01B	30.30B	23.71B	22.62B
	Total Debt
7.60B	7.21B	7.86B	4.16B	4.16B
	Net Debt
5.93B	5.03B	5.75B	1.57B	763.00M
	Total Liabilities
20.23B	22.10B	20.07B	14.31B	13.63B
	Stockholders Equity
10.27B	8.85B	8.97B	8.47B	8.06B
Cash Flow		Free Cash Flow
279.00M	2.75B	1.05B	1.47B	2.15B
	Operating Cash Flow
1.49B	3.97B	1.96B	2.26B	2.72B
	Investing Cash Flow
-1.78B	-1.64B	-4.17B	-873.00M	-719.00M
	Financing Cash Flow
-173.00M	-2.18B	1.67B	-2.23B	280.00M

Cummins Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 285.88
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CMI, the sentiment is Negative. The current price of 285.88 is below the 20-day moving average (MA) of 308.98, below the 50-day MA of 337.83, and below the 200-day MA of 327.73, indicating a bearish trend. The MACD of -9.52 indicates Positive momentum. The RSI at 35.15 is Neutral, neither overbought nor oversold. The STOCH value of 25.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CMI.

Cummins Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DOV	76 Outperform	$21.87B	8.21	24.30%	1.29%	-2.99%	159.26%
ETN	74 Outperform	$106.06B	28.50	20.23%	1.43%	7.25%	18.36%
CMI	73 Outperform	$38.81B	9.93	41.27%	2.53%	0.14%	444.36%
HWM	73 Outperform	$50.30B	44.16	26.89%	0.25%	11.90%	52.65%
IR	68 Neutral	$28.59B	34.45	8.40%	0.11%	5.22%	8.01%
PH	68 Neutral	$72.13B	23.18	25.87%	1.16%	0.41%	19.76%
Sector *	62 Neutral	$7.50B	12.89	3.19%	3.38%	3.64%	-14.27%