Cummins (CMI) AI Stock Analysis

• Market Cap: $74.41B
• Dividend Yield: 1.48%
• Average Volume (3M): 712.09K
• Price to Earnings (P/E): 28.3
• Beta (1Y): 1.07
• Revenue Growth: -1.78%
• EPS Growth: 27.35%
• Country: US
• Employees: 69,600
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 5.59
• Shares Outstanding: 138,036,250
• 10 Day Avg. Volume: 413,773
• 30 Day Avg. Volume: 712,093
• PEG Ratio: 0.03
• Price to Book (P/B): 4.69
• Price to Sales (P/S): 1.41
• P/FCF Ratio: 172.68
• Enterprise Value/Market Cap: 0.87
• Enterprise Value/Revenue: 1.93
• Enterprise Value/Gross Profit: 7.52
• Enterprise Value/Ebitda: 12.28
• 1Y Price Target: $538.00
• Price Target Upside: -1.19% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: $514.00 ▼(-5.60% Downside)

Cummins' strong technical indicators and cash flow performance are offset by challenges in revenue growth and profitability margins. The company's strategic focus on international markets and operational efficiencies provides some optimism, but valuation concerns and North American market challenges temper the outlook.

Positive Factors

Cash Generation

Strong cash generation enhances Cummins' ability to invest in growth opportunities, manage debt, and return capital to shareholders, supporting long-term financial health.

International Market Growth

Growth in international markets, especially China and India, diversifies revenue streams and reduces dependency on North American markets, enhancing resilience.

Strategic Partnerships

Partnerships like the one with Komatsu can drive innovation and market penetration, positioning Cummins as a leader in sustainable power solutions.

Negative Factors

Decline in North American Truck Market

A significant decline in the North American truck market impacts Cummins' core revenue stream, posing challenges to growth and profitability in a key segment.

Electrolyzer Business Challenges

Challenges in the electrolyzer business reflect potential setbacks in Cummins' diversification efforts and adaptation to new energy markets, affecting future growth.

Profitability Margin Decline

A decline in profitability margins indicates rising costs or pricing pressures, which can hinder Cummins' ability to maintain competitive pricing and invest in growth.

Cummins Business Overview & Revenue Model

Company Description

Cummins 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 Money

Cummins 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 Financial Statement Overview

Summary

Cummins demonstrates strong cash flow performance and improved leverage management. However, declining revenue and profitability margins in the TTM indicate challenges in maintaining growth and operational efficiency.

Income Statement

Cummins shows a strong gross profit margin of 25.61% in the TTM, indicating efficient production processes. However, the net profit margin has decreased to 7.94% from 11.57% in the previous year, reflecting increased costs or pricing pressures. The revenue growth rate is negative at -41.2% in the TTM, suggesting a significant decline in sales. EBIT and EBITDA margins have also decreased, indicating reduced operational efficiency.

Balance Sheet

The debt-to-equity ratio has improved to 0.61 in the TTM from 0.74 in the previous year, showing better leverage management. However, the return on equity has decreased to 23.69% from 38.42%, indicating reduced profitability for shareholders. The equity ratio remains stable, reflecting a balanced asset structure.

Cash Flow

Free cash flow has grown by 37.89% in the TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 0.37, suggesting efficient cash conversion. The free cash flow to net income ratio is 0.65, showing a healthy cash flow relative to profits.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	33.58B	34.10B	34.06B	28.07B	24.02B	19.81B
Gross Profit	8.60B	8.44B	8.25B	6.72B	5.70B	4.89B
EBITDA	5.27B	6.34B	3.02B	3.80B	3.52B	3.11B
Net Income	2.67B	3.95B	735.00M	2.15B	2.13B	1.79B
Balance Sheet
Total Assets	33.64B	31.54B	32.01B	30.30B	23.71B	22.62B
Cash, Cash Equivalents and Short-Term Investments	3.16B	2.26B	2.74B	2.57B	3.19B	3.86B
Total Debt	8.32B	7.60B	7.21B	8.36B	4.61B	4.62B
Total Liabilities	20.54B	20.23B	22.10B	20.07B	14.31B	13.63B
Stockholders Equity	12.06B	10.27B	8.85B	8.97B	8.47B	8.06B
Cash Flow
Free Cash Flow	2.28B	279.00M	2.75B	1.05B	1.47B	2.15B
Operating Cash Flow	3.51B	1.49B	3.97B	1.96B	2.26B	2.72B
Investing Cash Flow	-1.56B	-1.78B	-1.64B	-4.17B	-873.00M	-719.00M
Financing Cash Flow	-1.14B	-173.00M	-2.18B	1.67B	-2.23B	280.00M

Cummins Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 544.49
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 544.49 is above the 20-day moving average (MA) of 519.52, above the 50-day MA of 490.81, and above the 200-day MA of 387.15, indicating a bullish trend. The MACD of 13.08 indicates Negative momentum. The RSI at 67.41 is Neutral, neither overbought nor oversold. The STOCH value of 89.30 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CMI.

Cummins Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PH	79 Outperform	$114.63B	32.29	27.30%	0.79%	0.22%	26.66%
HWM	78 Outperform	$84.79B	58.94	30.06%	0.21%	9.70%	36.28%
ETN	75 Outperform	$125.33B	32.06	20.69%	1.29%	8.24%	6.21%
IEX	75 Outperform	$13.51B	29.21	12.21%	1.56%	7.09%	-2.29%
CMI	72 Outperform	$74.41B	28.26	23.84%	1.48%	-1.78%	27.35%
IR	69 Neutral	$32.13B	62.59	5.35%	0.10%	4.20%	-34.47%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%