CUMMINS INC (CMI) Stock Fundamental Analysis
NYSE:CMI - New York Stock Exchange, Inc. - US2310211063 - Common Stock - Currency: USD
CMI gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 131 industry peers in the Machinery industry. CMI has a medium profitability rating, but doesn't score so well on its financial health evaluation. CMI is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
CMI had positive earnings in the past year.
CMI had a positive operating cash flow in the past year.
Each year in the past 5 years CMI has been profitable.
CMI had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
CMI has a Return On Assets of 6.54%. This is in the better half of the industry: CMI outperforms 63.78% of its industry peers.
CMI has a Return On Equity of 20.33%. This is amongst the best in the industry. CMI outperforms 81.89% of its industry peers.
CMI's Return On Invested Capital of 9.81% is fine compared to the rest of the industry. CMI outperforms 68.50% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for CMI is below the industry average of 11.19%.
The 3 year average ROIC (8.89%) for CMI is below the current ROIC(9.81%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.54% | ||
| ROE | 20.33% | ||
| ROIC | 9.81% |
ROA(3y)6.13%
ROA(5y)7.55%
ROE(3y)19.14%
ROE(5y)21.94%
ROIC(3y)8.89%
ROIC(5y)9.03%
1.3 Margins
The Profit Margin of CMI (6.13%) is comparable to the rest of the industry.
CMI's Profit Margin has declined in the last couple of years.
The Operating Margin of CMI (10.01%) is comparable to the rest of the industry.
CMI's Operating Margin has been stable in the last couple of years.
The Gross Margin of CMI (24.58%) is worse than 64.57% of its industry peers.
In the last couple of years the Gross Margin of CMI has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.01% | ||
| PM (TTM) | 6.13% | ||
| GM | 24.58% |
OM growth 3Y1.52%
OM growth 5Y-0.76%
PM growth 3Y-37.95%
PM growth 5Y-24.86%
GM growth 3Y-0.66%
GM growth 5Y0.07%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so CMI is still creating some value.
The number of shares outstanding for CMI has been increased compared to 1 year ago.
Compared to 5 years ago, CMI has less shares outstanding
CMI has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.85 indicates that CMI is not in any danger for bankruptcy at the moment.
CMI has a Altman-Z score (3.85) which is in line with its industry peers.
The Debt to FCF ratio of CMI is 22.51, which is on the high side as it means it would take CMI, 22.51 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of CMI (22.51) is worse than 64.57% of its industry peers.
A Debt/Equity ratio of 0.67 indicates that CMI is somewhat dependend on debt financing.
CMI has a worse Debt to Equity ratio (0.67) than 68.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.67 | ||
| Debt/FCF | 22.51 | ||
| Altman-Z | 3.85 |
ROIC/WACC1.06
WACC9.29%
2.3 Liquidity
A Current Ratio of 1.32 indicates that CMI should not have too much problems paying its short term obligations.
With a Current ratio value of 1.32, CMI is not doing good in the industry: 84.25% of the companies in the same industry are doing better.
CMI has a Quick Ratio of 1.32. This is a bad value and indicates that CMI is not financially healthy enough and could expect problems in meeting its short term obligations.
CMI has a worse Quick ratio (0.79) than 82.68% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.32 | ||
| Quick Ratio | 0.79 |
3. Growth
3.1 Past
CMI shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.91%.
CMI shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 6.29% yearly.
The Revenue has been growing slightly by 2.72% in the past year.
CMI shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.46% yearly.
EPS 1Y (TTM)2.91%
EPS 3Y16.69%
EPS 5Y6.29%
EPS Q2Q%27.67%
Revenue 1Y (TTM)2.72%
Revenue growth 3Y19.8%
Revenue growth 5Y7.46%
Sales Q2Q%0.3%
3.2 Future
The Earnings Per Share is expected to grow by 4.72% on average over the next years.
The Revenue is expected to grow by 3.73% on average over the next years.
EPS Next Y10.04%
EPS Next 2Y8.7%
EPS Next 3Y12.29%
EPS Next 5Y4.72%
Revenue Next Year0.53%
Revenue Next 2Y1.68%
Revenue Next 3Y3.9%
Revenue Next 5Y3.73%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 18.27, CMI is valued on the expensive side.
CMI's Price/Earnings ratio is a bit cheaper when compared to the industry. CMI is cheaper than 73.23% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 28.64. CMI is valued slightly cheaper when compared to this.
CMI is valuated correctly with a Price/Forward Earnings ratio of 16.30.
Based on the Price/Forward Earnings ratio, CMI is valued a bit cheaper than 75.59% of the companies in the same industry.
CMI's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.51.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.27 | ||
| Fwd PE | 16.3 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CMI is valued a bit cheaper than the industry average as 69.29% of the companies are valued more expensively.
66.14% of the companies in the same industry are cheaper than CMI, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 150.08 | ||
| EV/EBITDA | 11.81 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates CMI does not grow enough to justify the current Price/Earnings ratio.
The decent profitability rating of CMI may justify a higher PE ratio.
CMI's earnings are expected to grow with 12.29% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.82
PEG (5Y)2.9
EPS Next 2Y8.7%
EPS Next 3Y12.29%
5. Dividend
5.1 Amount
CMI has a Yearly Dividend Yield of 1.99%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.65, CMI pays a better dividend. On top of this CMI pays more dividend than 87.40% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.28, CMI has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.99% |
5.2 History
On average, the dividend of CMI grows each year by 7.96%, which is quite nice.
CMI has been paying a dividend for at least 10 years, so it has a reliable track record.
CMI has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)7.96%
Div Incr Years19
Div Non Decr Years20
5.3 Sustainability
45.64% of the earnings are spent on dividend by CMI. This is a bit on the high side, but may be sustainable.
CMI's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP45.64%
EPS Next 2Y8.7%
EPS Next 3Y12.29%
CUMMINS INC
NYSE:CMI (1/23/2025, 8:54:07 PM)
After market: 368.91 0 (0%)368.91
+2.91 (+0.8%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners87.29%
Inst Owner Change-0.84%
Ins Owners0.25%
Ins Owner Change1.86%
Market Cap50.58B
Analysts70.71
Price Target393.54 (6.68%)
Short Float %1.3%
Short Ratio2.8
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.99% |
Yearly Dividend6.51
Dividend Growth(5Y)7.96%
DP45.64%
Div Incr Years19
Div Non Decr Years20
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)14.58%
Min EPS beat(2)8.34%
Max EPS beat(2)20.82%
EPS beat(4)2
Avg EPS beat(4)3.83%
Min EPS beat(4)-12.31%
Max EPS beat(4)20.82%
EPS beat(8)3
Avg EPS beat(8)2.51%
EPS beat(12)5
Avg EPS beat(12)-0.97%
EPS beat(16)8
Avg EPS beat(16)1.01%
Revenue beat(2)2
Avg Revenue beat(2)2.66%
Min Revenue beat(2)0.94%
Max Revenue beat(2)4.38%
Revenue beat(4)3
Avg Revenue beat(4)1.92%
Min Revenue beat(4)-1.54%
Max Revenue beat(4)4.38%
Revenue beat(8)7
Avg Revenue beat(8)2.73%
Revenue beat(12)10
Avg Revenue beat(12)2.83%
Revenue beat(16)14
Avg Revenue beat(16)3.71%
PT rev (1m)5.25%
PT rev (3m)19.69%
EPS NQ rev (1m)0.1%
EPS NQ rev (3m)13.96%
EPS NY rev (1m)0%
EPS NY rev (3m)5.9%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.87%
Revenue NY rev (1m)0.08%
Revenue NY rev (3m)0.62%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.27 | ||
| Fwd PE | 16.3 | ||
| P/S | 1.48 | ||
| P/FCF | 150.08 | ||
| P/OCF | 33.19 | ||
| P/B | 4.9 | ||
| P/tB | 9.3 | ||
| EV/EBITDA | 11.81 |
EPS(TTM)20.19
EY5.47%
EPS(NY)22.64
Fwd EY6.14%
FCF(TTM)2.46
FCFY0.67%
OCF(TTM)11.12
OCFY3.01%
SpS249.44
BVpS75.24
TBVpS39.69
PEG (NY)1.82
PEG (5Y)2.9
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.54% | ||
| ROE | 20.33% | ||
| ROCE | 16.73% | ||
| ROIC | 9.81% | ||
| ROICexc | 10.89% | ||
| ROICexgc | 14.34% | ||
| OM | 10.01% | ||
| PM (TTM) | 6.13% | ||
| GM | 24.58% | ||
| FCFM | 0.99% |
ROA(3y)6.13%
ROA(5y)7.55%
ROE(3y)19.14%
ROE(5y)21.94%
ROIC(3y)8.89%
ROIC(5y)9.03%
ROICexc(3y)10.4%
ROICexc(5y)10.63%
ROICexgc(3y)13.63%
ROICexgc(5y)13.51%
ROCE(3y)15.01%
ROCE(5y)15%
ROICexcg growth 3Y13.5%
ROICexcg growth 5Y0.91%
ROICexc growth 3Y8.62%
ROICexc growth 5Y-1.83%
OM growth 3Y1.52%
OM growth 5Y-0.76%
PM growth 3Y-37.95%
PM growth 5Y-24.86%
GM growth 3Y-0.66%
GM growth 5Y0.07%
F-Score5
Asset Turnover1.07
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.67 | ||
| Debt/FCF | 22.51 | ||
| Debt/EBITDA | 1.55 | ||
| Cap/Depr | 112.19% | ||
| Cap/Sales | 3.47% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 34.02% | ||
| Profit Quality | 16.07% | ||
| Current Ratio | 1.32 | ||
| Quick Ratio | 0.79 | ||
| Altman-Z | 3.85 |
F-Score5
WACC9.29%
ROIC/WACC1.06
Cap/Depr(3y)118.01%
Cap/Depr(5y)110.96%
Cap/Sales(3y)3.37%
Cap/Sales(5y)3.26%
Profit Quality(3y)164.06%
Profit Quality(5y)143.73%
High Growth Momentum
Growth
EPS 1Y (TTM)2.91%
EPS 3Y16.69%
EPS 5Y6.29%
EPS Q2Q%27.67%
EPS Next Y10.04%
EPS Next 2Y8.7%
EPS Next 3Y12.29%
EPS Next 5Y4.72%
Revenue 1Y (TTM)2.72%
Revenue growth 3Y19.8%
Revenue growth 5Y7.46%
Sales Q2Q%0.3%
Revenue Next Year0.53%
Revenue Next 2Y1.68%
Revenue Next 3Y3.9%
Revenue Next 5Y3.73%
EBIT growth 1Y3.13%
EBIT growth 3Y21.62%
EBIT growth 5Y6.64%
EBIT Next Year35.27%
EBIT Next 3Y16.95%
EBIT Next 5Y5.57%
FCF growth 1Y-66.03%
FCF growth 3Y8.64%
FCF growth 5Y11.55%
OCF growth 1Y-18.81%
OCF growth 3Y13.37%
OCF growth 5Y10.77%