Cummins (CMI) AI Stock Analysis

Compare

2,360 Followers

Top Page

Cummins

(NYSE:CMI)

Select Model

Neutral 67 (OpenAI - 5.2)

Rating:67Neutral

Price Target:

$587.00

▲(0.54% Upside)

Action:DowngradedDate:02/06/26

The score is led by solid fundamentals (strong recent growth, improving leverage, and a rebound in free cash flow) and a supportive earnings outlook (positive 2026 guidance and strong segment profitability in Power Systems/Distribution). Offsetting this are weaker near-term technical momentum, an elevated P/E with a modest dividend yield, and cyclical headwinds highlighted on the call (NA truck weakness, tariffs, and Accelera losses).

Positive Factors

Cash generation and conversion

Sustained operating cash flow (~$3.6B TTM) and a meaningful free cash flow rebound (~$2.4B) support durable capital allocation: funding capex, dividends, buybacks, and deleveraging without relying on external financing. Strong cash conversion also buffers the business through cyclical revenue swings.

High-margin segment leadership

Power Systems and Distribution delivering record sales and elevated EBITDA margins reflects durable competitive strength and product mix. High-margin power-generation and aftermarket businesses provide structural margin support and diversify cyclicality tied to truck OEM demand.

Improved leverage and balance-sheet flexibility

A materially lower debt-to-equity (~0.59) and stronger equity base improve financial flexibility and reduce refinancing risk across cycles. This position, coupled with an A credit profile noted by management, enables disciplined investment and shareholder returns without stressing liquidity in downturns.

Negative Factors

Accelera (electrolyzer) losses and charges

Persistent Accelera losses and sizable one-time and ongoing charges strain reported profitability and cash. Continued losses require management attention and potential incremental capital or restructurings, which dilute returns and can distract from core business execution over the medium term.

Cyclical truck-market exposure

Significant sensitivity to North American heavy/medium truck cycles creates revenue and margin volatility for Engines and Components. Prolonged weakness in OEM production depresses parts demand, pressures utilization and margins, and can cause uneven cash flow and earnings over multiple quarters.

Tariff-driven margin dilution and regional uncertainty

Persistent tariffs create a structural, incremental drag on margins and add forecasting uncertainty due to timing lags. Combined with guided weakness in key regions (China and India), tariff volatility complicates margin sustainability and planning, increasing execution risk across close-term cycles.

Cummins (CMI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$80.67B

Dividend Yield1.48%

Average Volume (3M)1.00M

Price to Earnings (P/E)28.5

Beta (1Y)1.09

Revenue Growth-1.78%

EPS Growth27.35%

CountryUS

Employees69,600

SectorIndustrials

Sector Strength72

IndustryIndustrial - Machinery

Share Statistics

EPS (TTM)5.84

Shares Outstanding138,165,470

10 Day Avg. Volume789,660

30 Day Avg. Volume1,001,025

Financial Highlights & Ratios

PEG Ratio-0.89

Price to Book (P/B)5.70

Price to Sales (P/S)2.09

P/FCF Ratio29.50

Enterprise Value/Market Cap1.07

Enterprise Value/Revenue2.55

Enterprise Value/Gross Profit10.09

Enterprise Value/Ebitda15.96

Forecast

1Y Price Target

$616.17

Price Target Upside5.53% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering13

EPS Forecast (FY)26.37

Revenue Forecast (FY)$35.65B

Cummins Business Overview & Revenue Model

Company DescriptionCummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. It operates through five segments: Engine, Distribution, Components, Power Systems, and New Power. The company offers diesel and natural gas-powered engines under the Cummins and other customer brands for the heavy and medium-duty truck, bus, recreational vehicle, light-duty automotive, construction, mining, marine, rail, oil and gas, defense, and agricultural markets; and offers new parts and services, as well as remanufactured parts and engines. It also provides power generation systems, high-horsepower engines, heavy and medium duty engines, application engineering services, custom-designed assemblies, retail and wholesale aftermarket parts, and in-shop and field-based repair services. In addition, the company offers emission solutions; turbochargers; air and fuel filters, fuel water separators, lube and hydraulic filters, coolants, fuel additives, and other filtration systems; and electronic control modules, sensors, and supporting software, as well as new, replacement, and remanufactured fuel systems. Further, it provides automated transmissions; standby and prime power generators, controls, paralleling systems, and transfer switches, as well as A/C generator/alternator products under the Stamford and AVK brands; and electrified power systems with components and subsystems, including battery, fuel cell, and hydrogen production technologies. Additionally, it offers filtration, aftertreatment, controls systems, air handling systems, automated transmissions, electric power generation systems, and batteries. The company sells its products to original equipment manufacturers, distributors, dealers, and other customers. The company was formerly known as Cummins Engine Company and changed its name to Cummins Inc. in 2001. Cummins Inc. was founded in 1919 and is headquartered in Columbus, Indiana.

How the Company Makes MoneyCummins generates revenue through several key streams, primarily derived from the sale of engines and related components across diverse markets, including automotive, industrial, and power generation sectors. The Engine segment is a significant contributor, providing a variety of diesel and natural gas engines for commercial applications. Additionally, the Power Systems segment offers power generation equipment and services, further solidifying the company's footprint in energy solutions. The Distribution segment, which includes the sale of parts and aftermarket services, plays a crucial role in ensuring ongoing revenue through maintenance and support contracts. Cummins also partners with original equipment manufacturers (OEMs) and various industries to develop tailored solutions, enhancing its market reach and driving collaboration in innovation. Economic cycles, global demand for clean energy, and regulatory changes around emissions standards also significantly influence Cummins' revenue generation.

Cummins Key Performance Indicators (KPIs)

Any

Revenue by Geography

Revenue by Geography
Breaks down revenue across different regions, revealing where Cummins is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.

Chart InsightsCummins' revenue growth in China is a bright spot, driven by demand in data centers and domestic trucks, contributing to a 9% increase. However, North American revenues are declining, reflecting a significant drop in truck volumes, with further declines expected. This regional disparity underscores the company's reliance on international markets to offset domestic challenges, including tariff impacts. Despite these headwinds, Cummins is maintaining operational improvements and has increased its dividend, signaling confidence in its diversified global strategy.

Data provided by:

The Fly

Cummins Earnings Call Summary

Earnings Call Date:Feb 05, 2026

(Q4-2025)

% Change Since: |

Next Earnings Date:May 05, 2026

Earnings Call Sentiment Positive

The call highlights strong underlying operational performance and record adjusted profitability driven by Power Systems and Distribution, successful product launches, capacity expansions, solid cash generation, and constructive 2026 guidance (revenues +3–8% and EBITDA ~17–18%). Offsetting these positives are pronounced demand weakness in North America heavy/medium truck markets, significant restructuring charges and ongoing losses in Accelera (electrolyzer), and ongoing tariff-related margin dilution and regional market uncertainty (China, India). On balance, the strength in core businesses, record adjusted margins, clear actions to reduce Accelera costs, and positive guidance outweigh the lowlights.

Q4-2025 Updates

Positive Updates

Record Adjusted EBITDA and Margin Expansion

Excluding one-time items, 2025 adjusted EBITDA was a record $5.8 billion or 17.4% of sales (vs. 15.7% in 2024). Fourth quarter adjusted EBITDA was $1.4 billion or 16.0% (vs. 15.8% a year ago).

Power Systems and Distribution Delivered Record Profitability

Power Systems full-year revenue of $7.5 billion, up 16% year-over-year, with record EBITDA margin of 22.7% (up 430 basis points from 18.4% in 2024). Distribution revenue was a record $12.4 billion, up 9% year-over-year, with record EBITDA margin of 14.6% (up 250 basis points from 12.1%).

Strong Q4 and FY Cash Flow and Capital Discipline

Operating cash flow in Q4 was an inflow of $1.5 billion (up $112 million YoY). Full-year capital expenditures were $1.2 billion, flat with prior year. Returned $1.1 billion to shareholders via dividends while maintaining investment in growth and an A credit rating.

Product and Strategic Progress

New product introductions and strategic actions: X10 engine (replacing L9 and X12), new B 7.2 diesel engine, S17 Sentum 1 MW genset, completed 95-liter capacity expansion ahead of schedule, acquisition of First Mode and collaboration with Komatsu for mining hybrid powertrains.

Positive 2026 Financial Guidance

Company guidance for 2026: revenues up 3% to 8% vs. 2025 and EBITDA margins ~17% to 18% (including tariff dilution). Power Systems guidance: revenue +12% to +17% and EBITDA 23%–24%. Distribution revenue guidance +5% to +10%.

Improved Underlying EPS Excluding One-Time Charges

Full-year all-in net earnings were $2.8 billion ($20.50 per diluted share). Excluding one-time charges, 2025 net earnings were $3.3 billion or $23.78 per diluted share (vs. $21.37 in 2024), showing underlying EPS growth.

Negative Updates

North America Heavy & Medium-Duty Truck Weakness

Significant weakness in North America truck markets: combined North America heavy and medium-duty truck engine volume declined 30% in Q4. Full-year engine segment revenues were $10.9 billion, down 7% year-over-year.

Components Segment Revenue Decline

Components revenues were $10.1 billion in 2025, down 10% from prior year, reflecting the impact of lower truck volumes despite margin improvement from cost reductions (EBITDA margin 13.8%).

Accelera / Electrolyzer Charges and Ongoing Losses

2025 included $458 million of charges related to the electrolyzer business (Accelera). Q4 included $218 million of charges. Accelera full-year net operating loss was $438 million (slight improvement vs. $452 million prior year). 2026 Accelera revenue guide $300–350 million with net losses improving to $325–355 million.

Tariff Volatility Diluting Margins

Ongoing tariff regime continues to dilute EBITDA percent; management quantified roughly a ~50 basis point net drag on full-year EBITDA percent for 2026, with timing lags in recovery and quarter-to-quarter variability (Q4 was the largest gross impact).

All-In Reported Earnings and EPS Down Year-Over-Year

All-in net earnings for 2025 were $2.8 billion ($20.50 per diluted share) vs. $3.9 billion ($28.37) in 2024. All-in Q4 results included $215 million of electrolyzer-related charges and EPS of $4.27; excluding charges, Q4 EPS was $5.81.

Regional and End-Market Weakness and Uncertainty

2026 outlook includes China total revenue decline of ~1% (weakness in domestic heavy/medium truck demand forecast down as much as 10%), India revenue expected to decrease ~5% (2025), and continued first-half weakness expected in North America truck markets with recovery in second half.

Company Guidance

Cummins guided 2026 company revenues up 3%–8% with EBITDA of roughly 17%–18% of sales (including tariff dilution), an effective tax rate around 24%, and capital expenditures of $1.35–$1.45 billion; segment guidance included Engine revenues flat–+5% (EBITDA 12%–13%), Components flat–+5% (EBITDA 13%–14%), Distribution +5%–10% (EBITDA 13.25%–14.25%), Power Systems +12%–17% (EBITDA 23%–24%), and Accelera revenues $300M–$350M with net losses narrowing to $325M–$355M. Management’s market assumptions: North America heavy‑duty production 220k–240k and medium‑duty 110k–120k (both flat to +10%), N.A. pickup engine shipments 125k–140k (‑5% to +5%), China revenues (incl. JVs) ~‑1% with HD/MD down 10%–flat, India revenues (incl. JVs) down ~5%, power‑generation revenues +10%–20%, mining engines flat–+10%, and aftermarket +2%–8%; they also noted tariffs are a dilutive headwind (about ~50 basis points) and reiterated a goal to return at least 50% of operating cash flow to shareholders.

Cummins Financial Statement Overview

Summary

Strong TTM revenue growth (~26.5%) and solid profitability (TTM gross margin ~25.3%, net margin ~8.4%) with improving leverage (TTM debt-to-equity ~0.59) and a meaningful free-cash-flow rebound (~$2.4B). Offsetting this are notable margin/earnings volatility (EBIT and net margin stepping down vs 2024) and choppy cash flow year-to-year, consistent with cyclicality.

Income Statement

Positive

CMI shows strong scale and a solid growth profile, with revenue up ~26.5% in TTM (Trailing-Twelve-Months) following a flat 2024 and strong 2023. Profitability is healthy in TTM with ~25.3% gross margin and ~8.4% net margin, but earnings quality has been volatile: 2024 net margin (~11.6%) was notably higher than TTM, while 2023 was weak (~2.2%). Operating profitability also stepped down versus 2024 (EBIT margin ~10.2% in TTM vs ~15.5% in 2024), suggesting margin normalization and/or mix/expense pressure despite higher sales.

Balance Sheet

Positive

The balance sheet looks reasonably positioned for an industrial cyclical. Leverage is moderate in TTM (debt-to-equity ~0.59), improved from 2022–2024 levels (~0.74–0.93 range), and equity has expanded (TTM equity ~$12.3B vs ~$10.3B in 2024). Returns are strong in TTM (return on equity ~24%), though they were unusually high in 2024 (~38%) and very weak in 2023 (~8%), highlighting cyclicality and earnings swings that can impact perceived balance-sheet strength.

Cash Flow

Positive

Cash generation is a clear positive in TTM (operating cash flow ~$3.6B; free cash flow ~$2.4B) with a sharp rebound from 2024 (free cash flow ~$0.3B). Free cash flow also covers a meaningful portion of earnings in TTM (~66%), indicating decent cash conversion. However, cash flow has been choppy year-to-year (2024 was a major down year), and operating cash flow relative to revenue remains modest in both TTM and prior periods, which can be a constraint in weaker demand environments.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	33.67B	34.10B	34.06B	28.07B	24.02B
Gross Profit	8.52B	8.44B	8.25B	6.72B	5.70B
EBITDA	5.38B	6.34B	3.02B	3.80B	3.52B
Net Income	2.84B	3.95B	735.00M	2.15B	2.13B
Balance Sheet
Total Assets	33.99B	31.54B	32.01B	30.30B	23.71B
Cash, Cash Equivalents and Short-Term Investments	3.61B	2.26B	2.74B	2.57B	3.19B
Total Debt	8.11B	7.60B	7.21B	8.36B	4.61B
Total Liabilities	20.58B	20.23B	22.10B	20.07B	14.31B
Stockholders Equity	12.35B	10.27B	8.85B	8.97B	8.47B
Cash Flow
Free Cash Flow	2.39B	279.00M	2.75B	1.05B	1.47B
Operating Cash Flow	3.62B	1.49B	3.97B	1.96B	2.26B
Investing Cash Flow	-1.84B	-1.78B	-1.64B	-4.17B	-873.00M
Financing Cash Flow	-662.00M	-173.00M	-2.18B	1.67B	-2.23B

Cummins Technical Analysis

Technical Analysis Sentiment

Positive

Last Price583.87

Price Trends

50DMA

559.75

Positive

100DMA

507.54

Positive

200DMA

433.79

Positive

Market Momentum

MACD

9.13

Positive

RSI

52.79

Neutral

STOCH

49.86

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CMI, the sentiment is Positive. The current price of 583.87 is below the 20-day moving average (MA) of 589.11, above the 50-day MA of 559.75, and above the 200-day MA of 433.79, indicating a neutral trend. The MACD of 9.13 indicates Positive momentum. The RSI at 52.79 is Neutral, neither overbought nor oversold. The STOCH value of 49.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CMI.

Cummins Risk Analysis

Cummins disclosed 32 risk factors in its most recent earnings report. Cummins reported the most risks in the "Legal & Regulatory" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Cummins Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ETN	80 Outperform	$145.82B	35.97	21.57%	1.29%	8.24%	6.21%
PH	80 Outperform	$127.38B	36.81	25.79%	0.79%	0.22%	26.66%
IEX	77 Outperform	$15.57B	32.64	12.35%	1.56%	7.09%	-2.29%
HWM	77 Outperform	$105.26B	70.77	30.44%	0.21%	9.70%	36.28%
IR	70 Outperform	$36.87B	64.93	5.35%	0.10%	4.20%	-34.47%
CMI	67 Neutral	$80.67B	28.48	25.14%	1.48%	-1.78%	27.35%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

* Industrials Sector Average

Performance Comparison

CMI

Cummins

583.87

222.41

61.53%

ETN

Eaton

375.92

86.31

29.80%

IEX

IDEX

209.47

18.13

9.47%

Parker Hannifin

1,009.18

346.80

52.36%

HWM

Howmet Aerospace

262.53

126.26

92.66%

Ingersoll Rand

94.14

9.44

11.15%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Feb 06, 2026