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CMI

Cummins NYSE:CMI Stock Report

Last Price

US$203.51

Market Cap

US$28.7b

7D

-0.2%

1Y

-10.7%

Updated

02 Oct, 2022

Data

Company Financials +
CMI fundamental analysis
Snowflake Score
Valuation6/6
Future Growth2/6
Past Performance3/6
Financial Health5/6
Dividends5/6

CMI Stock Overview

Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide.

Cummins Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Cummins
Historical stock prices
Current Share PriceUS$203.51
52 Week HighUS$247.48
52 Week LowUS$184.28
Beta1.03
1 Month Change-4.40%
3 Month Change4.84%
1 Year Change-10.73%
3 Year Change28.92%
5 Year Change18.24%
Change since IPO3,061.32%

Recent News & Updates

Sep 16

Cummins: The Wrong Time To Hold

Summary Cummins stock year-to-date remains 15% better than S&P 500 Index, even after the September 13 drop. Cummins, however, is a cyclical business. The market for U.S. heavy-duty trucks peaked in May and has declined every month since for a total decline of 10%. Revenue in the second quarter was $6.6 billion, with an EBITDA of 15% of sales and earnings per share growth of 16%. The company’s current guidance for the full year assumes revenue will continue to grow 8% over 2021. Cummins is unlikely to achieve its profit objectives in the second half of 2022, which should lead to lower stock prices. Cummins is a sell. Cummins' Cyclicality Cummins Inc. (CMI) had a reputation as a cyclical business that varied with the sales of trucks. It no longer has that reputation because the last two declines in 2008 and 2019 were general recessions covering most businesses. However, now trucking appears likely to continue to decline and Cummins likely will decline as trucks do. Cummins' Business Cummins has been a well-managed business that aims for long-term results. Its original market is the sale of diesel engines used in trucks that are manufactured by other companies that make their own diesel engines. Customers are opting to buy Cummins products because of fuel efficiency, reliability, and low maintenance costs. To succeed, Cummins must continue to have a better-performing engine and have a manufacturing organization that can produce that product at a low price. They have been successful in doing this by making large-scale investments to achieve manufacturing efficiency and have come out of downturn cycles stronger than they went in. Truck sales are very cyclical. To get around that, Cummins has expanded into the distribution, components, and power generation system business. They have succeeded in reducing cyclicality. It is a highly efficient and very profitable cyclical business. They have large operations and joint ventures in India, China, and Brazil, and worldwide parts supplies. The Heavy U.S. Truck Market May Sales of heavy trucks were 491,000 units. By August, the volume declined by 50,000 units to 414,000 This is an 11% decline in three months. This data is seasonally adjusted. FRED Management made its presentation of second quarter results before the last two months of decline in heavy trucks were available. The decline in June was modest. Cummins might have lowered its guidance if they had seen more data on truck sales. Truck sales for September will be available on the fourth of October. A fourth consecutive decline will further confirm the decline in the Cummins market. Second Quarter Results Quarterly results are summarized by the author in the table below. Cummins Q2 2022 $ Million 2022 2021 % Growth Revenue 6,586 6,111 7.8% Net Income 678 600 13.0% EPS $/Share 4.77 4.10 16.3% Revenue increased by 7.8%, but net income increased by 13% because incremental volume did not increase fixed costs in manufacturing. Cummins buys back shares, so the earnings per share increased more than net income. Project Zero The new CEO, Janet Rumsey, has been responsible for the development of "Project Zero," an effort to build truck powertrains with no carbon emissions. This "New Power" includes fuel cells and other electrical power generation. In 2022, this business is projected to have $200 million of revenue, but $220 million in negative EBITDA because of the heavy development and marketing cost. The new CEO has just completed the acquisition of Meritor. This is a company with annual sales of approximately $4.4 billion, with a net income of $0.3 billion. The purchase price is $3.7 billion. They expect that the acquisition will be accretive for earnings-per-share. The business makes axles, brakes, and other powertrain components. It also makes equipment for electric powertrains which mesh with project zero. Cummins previously had only made small bolt-on deals that were nothing like the size of Meritor. The new CEO is putting most of her effort into the new power business to make it succeed. They have made acquisitions before the current large one to gain technology that they intend to develop into zero-emission vehicles. They have a lot of research to build the infrastructure for zero-emission vehicles, which is why the new power business is running a negative EBITDA of greater than revenue. The task of integrating their new $4.4 billion acquisition is going to take a lot of effort. So, management's focus is on this area of the business when it is likely that the core trucking business will experience lower growth and, possibly, next year negative growth. The new power business is counting heavily on federal incentives built into the infrastructure bill and the new anti-inflation bill passed by Congress. There is considerable effort in packaging the new technology to meet the incentives based on this legislation. For example, Cummins has reached a deal with Walmart (WMT) to power heavy-duty trucks with natural gas as fuel. Efforts like that, while creative, will take some time to manage. They are heavily into research on hydrogen using fuel cells, so there is a lot of effort underway that can create a great new business. However, this will require significant effort to make them viable in the medium term. Full Year Revenue Growth and EBITDA The following table lists Cummins' projections for the growth of the individual market segments before consideration of the acquisition. The average growth assumed for the second half of 2022 is 8%. Trucks are assumed to be growing at 10% a year. Cummins and its supply chain have been stretched to meet that demand. They are still working with customers to meet the demand for new trucks. The market for trucks will be impacted by the economy. The economy is no longer growing rapidly as it recovers from the pandemic. You don't have to believe that the economy will go into recession to question whether customers will continue to buy products after the Fed's interest rate increases, at a rate that is growing by 8%. Full Year Cummins Guidance Projection Before Impact of Meritor Segments Revenue Growth EBITDA Engine 10% 14.50% Distribution 11% 10.50% Components 3% 16.80% Power 8% 11.00% New Power $Billion $0.20 ($0.20) Total 8% 15.50% This Data is from Cummins Q2 Presentation.

Sep 08

Cummins to scale electrolyzer manufacturing capacity at Oevel factory

Cummins (NYSE:CMI) is scaling electrolyzer manufacturing capacity at its Oevel factory in Belgium to 1GW. The project is being supported by Important Project of Common European Interest (IPCEI) Hy2Tech program. IPCEI will help Cummins (CMI) develop a new generation of PEM electrolyzer cell stacks to power large-scale hydrogen production systems. The expansion in Belgium adds to Cummins’ already scaling global electrolyzer manufacturing footprint. The company has added capacity at its Mississauga, Canada, facility and is building two new electrolyzer factories in Spain and China, each starting at 500MW of manufacturing capacity and scalable to 1GW.

Aug 31

Transport Enterprise Leasing signs LOI to purchase Cummins hydrogen engine

Cummins (NYSE:CMI) has signed a letter of intent with Transport Enterprise Leasing, under which the latter will purchase Cummins' 15-liter hydrogen internal combustion engines when available. The truck/trailer equipment lease provider plans to integrate the Cummins' X15H hydrogen engines into its fleet of heavy-duty trucks. Hydrogen engines can use zero-carbon green hydrogen fuel, produced by Cummins-manufactured electrolyzers. Earlier this week, Cummins and Versatile hydrogen engine joined hands for decarbonization

Shareholder Returns

CMIUS MachineryUS Market
7D-0.2%-0.9%-2.5%
1Y-10.7%-18.6%-23.2%

Return vs Industry: CMI exceeded the US Machinery industry which returned -18.3% over the past year.

Return vs Market: CMI exceeded the US Market which returned -23.2% over the past year.

Price Volatility

Is CMI's price volatile compared to industry and market?
CMI volatility
CMI Average Weekly Movement3.3%
Machinery Industry Average Movement5.4%
Market Average Movement6.8%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: CMI is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: CMI's weekly volatility (3%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
191959,900Jen Rumseyhttps://www.cummins.com

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.

Cummins Fundamentals Summary

How do Cummins's earnings and revenue compare to its market cap?
CMI fundamental statistics
Market CapUS$28.69b
Earnings (TTM)US$2.05b
Revenue (TTM)US$24.79b

14.0x

P/E Ratio

1.2x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
CMI income statement (TTM)
RevenueUS$24.79b
Cost of RevenueUS$18.80b
Gross ProfitUS$5.99b
Other ExpensesUS$3.94b
EarningsUS$2.05b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)14.53
Gross Margin24.16%
Net Profit Margin8.26%
Debt/Equity Ratio46.2%

How did CMI perform over the long term?

See historical performance and comparison

Dividends

3.1%

Current Dividend Yield

40%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is CMI undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

6/6

Valuation Score 6/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for CMI?

Other financial metrics that can be useful for relative valuation.

CMI key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue1.3x
Enterprise Value/EBITDA10.2x
PEG Ratio1.5x

Price to Earnings Ratio vs Peers

How does CMI's PE Ratio compare to its peers?

CMI PE Ratio vs Peers
The above table shows the PE ratio for CMI vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average14.1x
PCAR PACCAR
13.2x2.3%US$29.1b
WAB Westinghouse Air Brake Technologies
23.3x12.8%US$14.8b
CAT Caterpillar
12.8x7.6%US$86.6b
ALSN Allison Transmission Holdings
7x0.1%US$3.2b
CMI Cummins
14x9.5%US$28.7b

Price-To-Earnings vs Peers: CMI is good value based on its Price-To-Earnings Ratio (14x) compared to the peer average (14.1x).


Price to Earnings Ratio vs Industry

How does CMI's PE Ratio compare vs other companies in the US Machinery Industry?

Price-To-Earnings vs Industry: CMI is good value based on its Price-To-Earnings Ratio (14x) compared to the US Machinery industry average (18.5x)


Price to Earnings Ratio vs Fair Ratio

What is CMI's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

CMI PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio14x
Fair PE Ratio22.9x

Price-To-Earnings vs Fair Ratio: CMI is good value based on its Price-To-Earnings Ratio (14x) compared to the estimated Fair Price-To-Earnings Ratio (22.9x).


Share Price vs Fair Value

What is the Fair Price of CMI when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: CMI ($203.51) is trading below our estimate of fair value ($685)

Significantly Below Fair Value: CMI is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.


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Future Growth

How is Cummins forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


9.5%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CMI's forecast earnings growth (9.5% per year) is above the savings rate (1.9%).

Earnings vs Market: CMI's earnings (9.5% per year) are forecast to grow slower than the US market (14.8% per year).

High Growth Earnings: CMI's earnings are forecast to grow, but not significantly.

Revenue vs Market: CMI's revenue (5.9% per year) is forecast to grow slower than the US market (7.7% per year).

High Growth Revenue: CMI's revenue (5.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CMI's Return on Equity is forecast to be high in 3 years time (27.6%)


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Past Performance

How has Cummins performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


8.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CMI has high quality earnings.

Growing Profit Margin: CMI's current net profit margins (8.3%) are lower than last year (9.5%).


Past Earnings Growth Analysis

Earnings Trend: CMI's earnings have grown by 8.4% per year over the past 5 years.

Accelerating Growth: CMI's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: CMI had negative earnings growth (-6.5%) over the past year, making it difficult to compare to the Machinery industry average (9.8%).


Return on Equity

High ROE: CMI's Return on Equity (21.5%) is considered high.


Discover strong past performing companies

Financial Health

How is Cummins's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: CMI's short term assets ($12.8B) exceed its short term liabilities ($7.7B).

Long Term Liabilities: CMI's short term assets ($12.8B) exceed its long term liabilities ($7.2B).


Debt to Equity History and Analysis

Debt Level: CMI's net debt to equity ratio (15.1%) is considered satisfactory.

Reducing Debt: CMI's debt to equity ratio has increased from 23% to 46.2% over the past 5 years.

Debt Coverage: CMI's debt is well covered by operating cash flow (46.3%).

Interest Coverage: CMI's interest payments on its debt are well covered by EBIT (32.4x coverage).


Balance Sheet


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Dividend

What is Cummins's current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


3.09%

Current Dividend Yield

Dividend Yield vs Market

Cummins Dividend Yield vs Market
How does Cummins dividend yield compare to the market?
SegmentDividend Yield
Company (Cummins)3.1%
Market Bottom 25% (US)1.7%
Market Top 25% (US)4.7%
Industry Average (Machinery)2.0%
Analyst forecast in 3 Years (Cummins)3.1%

Notable Dividend: CMI's dividend (3.09%) is higher than the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: CMI's dividend (3.09%) is low compared to the top 25% of dividend payers in the US market (4.73%).


Stability and Growth of Payments

Stable Dividend: CMI's dividends per share have been stable in the past 10 years.

Growing Dividend: CMI's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (40.3%), CMI's dividend payments are well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (71.6%), CMI's dividend payments are covered by cash flows.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.6yrs

Average management tenure


CEO

Jen Rumsey (48 yo)

0.67yr

Tenure

US$4,205,331

Compensation

Ms. Jennifer W. Rumsey, also known as Jen, has been the President since March 01, 2021, Director since February 2022 & Chief Executive Officer since August 1, 2022 at Cummins Inc. and served as its Chief O...


CEO Compensation Analysis

Jen Rumsey's Compensation vs Cummins Earnings
How has Jen Rumsey's remuneration changed compared to Cummins's earnings?
DateTotal Comp.SalaryCompany Earnings
Jun 30 2022n/an/a

US$2b

Mar 31 2022n/an/a

US$2b

Dec 31 2021US$4mUS$717k

US$2b

Compensation vs Market: Jen's total compensation ($USD4.21M) is below average for companies of similar size in the US market ($USD13.04M).

Compensation vs Earnings: Insufficient data to compare Jen's compensation with company performance.


Leadership Team

Experienced Management: CMI's management team is not considered experienced ( 1.6 years average tenure), which suggests a new team.


Board Members

Experienced Board: CMI's board of directors are seasoned and experienced ( 13.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: CMI insiders have only sold shares in the past 3 months.


Recent Insider Transactions

NYSE:CMI Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
26 Aug 22SellUS$1,001,327Livingston SatterthwaiteIndividual4,350US$230.19
25 May 22SellUS$311,407Franklin Chang DiazIndividual1,560US$199.62
25 Feb 22SellUS$203,994Franklin Chang DiazIndividual1,000US$203.99
25 Feb 22SellUS$53,673Alexis HermanIndividual263US$204.08
17 Nov 21SellUS$233,810Bruno V. Di LeoIndividual1,000US$233.81
10 Nov 21SellUS$498,873Franklin Chang DiazIndividual2,100US$237.56
05 Nov 21SellUS$461,328Alexis HermanIndividual1,950US$236.58

Ownership Breakdown

What is the ownership structure of CMI?
Owner TypeNumber of SharesOwnership Percentage
Private Companies2,3830.002%
State or Government59,6360.04%
Individual Insiders667,4190.5%
General Public22,699,19516.1%
Institutions117,563,69083.4%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Top 25 shareholders own 50.86% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
9.2%
The Vanguard Group, Inc.
12,977,058$2.6b0.8%0.06%
8.66%
BlackRock, Inc.
12,215,547$2.5b-0.68%0.06%
4.59%
State Street Global Advisors, Inc.
6,467,384$1.3b-2.53%0.07%
2.66%
T. Rowe Price Group, Inc.
3,756,212$764.4m22.55%0.09%
2.56%
Capital Research and Management Company
3,611,531$735.0m9.1%0.05%
1.99%
Geode Capital Management, LLC
2,804,059$570.7m1%0.08%
1.78%
Charles Schwab Investment Management, Inc.
2,516,484$512.1m6.17%0.14%
1.47%
LSV Asset Management
2,076,723$422.6m-2.86%0.89%
1.44%
Northern Trust Global Investments
2,034,168$414.0m-1.66%0.09%
1.42%
First Eagle Investment Management, LLC
1,998,602$406.7m4.75%0.72%
1.38%
Columbia Management Investment Advisers, LLC
1,941,906$395.2m-10.64%0.12%
1.32%
UBS Asset Management
1,858,878$378.3m2.71%0.07%
1.28%
The Public Investment Fund of The Kingdom of Saudi Arabia
1,800,301$366.4m0%0.13%
1.16%
Legal & General Investment Management Limited
1,634,227$332.6m0.98%0.1%
1.13%
Hotchkis and Wiley Capital Management, LLC
1,599,827$325.6m-6.58%1.29%
1.09%
Loomis Sayles & Company, L.P.
1,543,591$314.1m-7.96%0.59%
1.05%
Dimensional Fund Advisors LP
1,482,533$301.7m-2.1%0.08%
1.05%
Stifel Asset Management Corp.
1,481,999$301.6m1.36%0.5%
0.98%
Norges Bank Investment Management
1,385,665$282.0m0%0.04%
0.97%
First Trust Advisors LP
1,367,135$278.2m-4.46%0.33%
0.85%
BNY Mellon Asset Management
1,194,708$243.1m3.24%0.06%
0.79%
Amundi Asset Management
1,114,607$226.8m1%0.07%
0.72%
Morgan Stanley, Investment Banking and Brokerage Investments
1,011,786$205.9m-6.78%0.04%
0.68%
Eaton Vance Management
960,777$195.5m5.78%0.08%
0.62%
Goldman Sachs Asset Management, L.P.
877,524$178.6m13.11%0.08%

Company Information

Cummins Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Cummins Inc.
  • Ticker: CMI
  • Exchange: NYSE
  • Founded: 1919
  • Industry: Construction Machinery and Heavy Trucks
  • Sector: Capital Goods
  • Implied Market Cap: US$28.693b
  • Shares outstanding: 140.99m
  • Website: https://www.cummins.com

Number of Employees


Location

  • Cummins Inc.
  • 500 Jackson Street
  • Box 3005
  • Columbus
  • Indiana
  • 47202-3005
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CMINYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
CUMDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
CMI *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1968
0I58LSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
CMIWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
C1MI34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 4 REPR 1 COMBRBRLJan 2020

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/02 00:00
End of Day Share Price2022/09/30 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.