NYSE:CMI

Stock Analysis Report

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Executive Summary

Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, products worldwide.


Snowflake Analysis

Established dividend payer with adequate balance sheet.


Similar Companies

Share Price & News

How has Cummins's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CMI's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-4.3%

CMI

1.2%

US Machinery

1.0%

US Market


1 Year Return

-3.1%

CMI

-7.5%

US Machinery

4.1%

US Market

Return vs Industry: CMI exceeded the US Machinery industry which returned -8.2% over the past year.

Return vs Market: CMI underperformed the US Market which returned 3.7% over the past year.


Shareholder returns

CMIIndustryMarket
7 Day-4.3%1.2%1.0%
30 Day4.9%4.7%5.4%
90 Day-3.7%-14.5%-5.7%
1 Year0.1%-3.1%-5.7%-7.5%6.5%4.1%
3 Year8.2%-1.0%4.1%-2.6%28.3%19.8%
5 Year33.8%14.7%31.5%15.8%52.2%35.0%

Price Volatility Vs. Market

How volatile is Cummins's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Cummins undervalued compared to its fair value and its price relative to the market?

11.28x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: CMI ($155.04) is trading above our estimate of fair value ($126.37)

Significantly Below Fair Value: CMI is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: CMI is good value based on its PE Ratio (11.3x) compared to the Machinery industry average (18.7x).

PE vs Market: CMI is good value based on its PE Ratio (11.3x) compared to the US market (15.1x).


Price to Earnings Growth Ratio

PEG Ratio: CMI is good value based on its PEG Ratio (0.6x)


Price to Book Ratio

PB vs Industry: CMI is overvalued based on its PB Ratio (3.2x) compared to the US Machinery industry average (1.9x).


Next Steps

Future Growth

How is Cummins forecast to perform in the next 1 to 3 years based on estimates from 21 analysts?

17.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CMI's forecast earnings growth (17.4% per year) is above the savings rate (2.2%).

Earnings vs Market: CMI's earnings (17.4% per year) are forecast to grow slower than the US market (21.6% per year).

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

Revenue vs Market: CMI's revenue (8.3% per year) is forecast to grow slower than the US market (8.9% per year).

High Growth Revenue: CMI's revenue (8.3% 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 (23.9%)


Next Steps

Past Performance

How has Cummins performed over the past 5 years?

10.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CMI has high quality earnings.

Growing Profit Margin: CMI's current net profit margins (9.3%) are lower than last year (10.2%).


Past Earnings Growth Analysis

Earnings Trend: CMI's earnings have grown by 10.4% 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 (-14.8%) over the past year, making it difficult to compare to the Machinery industry average (-5.7%).


Return on Equity

High ROE: CMI's Return on Equity (26.5%) is considered high.


Next Steps

Financial Health

How is Cummins's financial position?


Financial Position Analysis

Short Term Liabilities: CMI's short term assets ($9.8B) exceed its short term liabilities ($7.0B).

Long Term Liabilities: CMI's short term assets ($9.8B) exceed its long term liabilities ($5.1B).


Debt to Equity History and Analysis

Debt Level: CMI's debt to equity ratio (40.7%) is considered high.

Reducing Debt: CMI's debt to equity ratio has increased from 21.1% to 40.7% over the past 5 years.

Debt Coverage: CMI's debt is well covered by operating cash flow (96.5%).

Interest Coverage: CMI's interest payments on its debt are well covered by EBIT (40.5x coverage).


Balance Sheet


Next Steps

Dividend

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

3.38%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: CMI's dividend (3.38%) is higher than the bottom 25% of dividend payers in the US market (1.75%).

High Dividend: CMI's dividend (3.38%) 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.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (36.9%), CMI's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CMI's dividends in 3 years are forecast to be covered by earnings (50.3% payout ratio).


Next Steps

Management

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

6.9yrs

Average management tenure


CEO

Tom Linebarger (56yo)

8.33yrs

Tenure

US$25,116,751

Compensation

Mr. N. Thomas Linebarger, also known as Tom, serves as Chief Executive Officer at Cummins Norway AS. Mr. Linebarger serves as Chief Executive Officer of Cummins Inc. at Cummins Power Systems, LLC. He has b ...


CEO Compensation Analysis

Compensation vs Market: Tom's total compensation ($USD25.12M) is above average for companies of similar size in the US market ($USD11.86M).

Compensation vs Earnings: Tom's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
N. Linebarger
Chairman & CEO8.33yrsUS$25.12m0.11% $25.4m
Livingston Satterthwaite
President & COO0.58yrUS$5.77m0.036% $8.2m
Mark Smith
CFO & VP1.17yrsUS$4.37m0.0042% $966.8k
Marya Rose
VP & Chief Administrative Officer8.5yrsUS$5.44m0.015% $3.3m
Tracy Embree
VP & President of Distribution Business Segmentno dataUS$4.88m0.0078% $1.8m
Walter Fier
VP & CTO0.58yrno data0.0023% $521.1k
Sherry Aaholm
VP & Chief Information Officer6.92yrsno data0.0029% $656.0k
James Hopkins
Executive Director of Investor Relationsno datano datano data
Sharon Barner
VP & General Counsel8.33yrsno data0.0082% $1.9m
Mark Sifferlen
VP of Ethics & Compliance and Secretaryno datano datano data

6.9yrs

Average Tenure

56yo

Average Age

Experienced Management: CMI's management team is seasoned and experienced (6.9 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
N. Linebarger
Chairman & CEO8.33yrsUS$25.12m0.11% $25.4m
Anant Talaulicar
Vice President17.33yrsUS$4.48mno data
Thomas Lynch
Independent Director5yrsUS$289.94k0.0056% $1.3m
William Miller
Independent Director31.25yrsUS$351.58k0.032% $7.3m
Georgia Nelson
Independent Director15.83yrsUS$310.33k0.016% $3.7m
Alexis Herman
Independent Lead Director19.33yrsUS$393.77k0.023% $5.1m
Stephen Dobbs
Independent Director9.58yrsUS$294.94k0.0073% $1.7m
Robert Herdman
Independent Director12.25yrsUS$295.94k0.011% $2.6m
Robert Bernhard
Independent Director11.58yrsUS$282.85k0.011% $2.5m
Franklin Chang Diaz
Independent Director10.42yrsUS$274.94k0.0055% $1.2m

11.9yrs

Average Tenure

65yo

Average Age

Experienced Board: CMI's board of directors are seasoned and experienced ( 11.9 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

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


Top Shareholders

Company Information

Cummins Inc.'s company bio, 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
  • Market Cap: US$22.857b
  • Shares outstanding: 147.43m
  • Website: https://www.cumminseurope.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
C1MI34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 4 REPR 1 COMBRBRLJan 2020

Biography

Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, products worldwide. It operates through five segments: Engine, Distribution, Components, Power Systems, and New Power. The company manufactures and markets 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 distributes parts, engines, and power generation products; and provides service solutions, such as engineering services, custom-designed assemblies, and repair services. The company offers emission solutions; and turbochargers for light-duty, mid-range, heavy-duty, and high-horsepower diesel markets, as well as provides air and fuel filters, fuel water separators, lube and hydraulic filters, coolants, fuel additives, and other filtration systems; and fuel systems for heavy-duty on-highway diesel engine applications and remanufactures fuel systems. It also provides 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 provides electrified power systems with components and subsystems, including battery, fuel cell, and hydrogen production technologies. The company offers electric and hybrid powertrains related components including filtration, after treatment, controls systems, air handling systems, automated transmissions, electric power generation systems, and hydrogen generation products. It 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. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/05/25 23:38
End of Day Share Price2020/05/22 00:00
Earnings2020/03/29
Annual Earnings2019/12/31


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.