CUMMINS INC (CMI) Stock Fundamental Analysis
NYSE:CMI - New York Stock Exchange, Inc. - US2310211063 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to CMI. CMI was compared to 128 industry peers in the Machinery industry. CMI scores excellent on profitability, but there are concerns on its financial health. CMI has a decent growth rate and is not valued too expensively. CMI also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year CMI was profitable.
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 better Return On Assets (8.54%) than 74.22% of its industry peers.
CMI has a better Return On Equity (25.42%) than 91.41% of its industry peers.
The Return On Invested Capital of CMI (11.32%) is better than 75.00% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for CMI is in line with the industry average of 10.71%.
The last Return On Invested Capital (11.32%) for CMI is above the 3 year average (10.13%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.54% | ||
| ROE | 25.42% | ||
| ROIC | 11.32% |
ROA(3y)7.3%
ROA(5y)7.76%
ROE(3y)23.56%
ROE(5y)23.61%
ROIC(3y)10.13%
ROIC(5y)9.3%
1.3 Margins
The Profit Margin of CMI (8.20%) is better than 64.84% of its industry peers.
CMI's Profit Margin has improved in the last couple of years.
CMI's Operating Margin of 11.42% is in line compared to the rest of the industry. CMI outperforms 59.38% of its industry peers.
In the last couple of years the Operating Margin of CMI has remained more or less at the same level.
With a Gross Margin value of 25.58%, CMI is not doing good in the industry: 63.28% of the companies in the same industry are doing better.
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 | 11.42% | ||
| PM (TTM) | 8.2% | ||
| GM | 25.58% |
OM growth 3Y5.37%
OM growth 5Y0.23%
PM growth 3Y9.26%
PM growth 5Y3.83%
GM growth 3Y1.89%
GM growth 5Y-0.23%
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 reduced compared to 1 year ago.
Compared to 5 years ago, CMI has less shares outstanding
CMI has a worse debt/assets ratio than last year.
2.2 Solvency
CMI has an Altman-Z score of 3.77. This indicates that CMI is financially healthy and has little risk of bankruptcy at the moment.
CMI has a better Altman-Z score (3.77) than 63.28% of its industry peers.
The Debt to FCF ratio of CMI is 1069.71, which is on the high side as it means it would take CMI, 1069.71 years of fcf income to pay off all of its debts.
CMI's Debt to FCF ratio of 1069.71 is on the low side compared to the rest of the industry. CMI is outperformed by 71.88% of its industry peers.
CMI has a Debt/Equity ratio of 0.62. This is a neutral value indicating CMI is somewhat dependend on debt financing.
CMI has a Debt to Equity ratio of 0.62. This is in the lower half of the industry: CMI underperforms 64.06% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 1069.71 | ||
| Altman-Z | 3.77 |
ROIC/WACC1.18
WACC9.56%
2.3 Liquidity
CMI has a Current Ratio of 1.34. This is a normal value and indicates that CMI is financially healthy and should not expect problems in meeting its short term obligations.
CMI has a Current ratio of 1.34. This is amonst the worse of the industry: CMI underperforms 81.25% of its industry peers.
CMI has a Quick Ratio of 1.34. 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's Quick ratio of 0.81 is on the low side compared to the rest of the industry. CMI is outperformed by 74.22% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.34 | ||
| Quick Ratio | 0.81 |
3. Growth
3.1 Past
CMI shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 18.76%, which is quite good.
CMI shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 7.79% yearly.
Looking at the last year, CMI shows a decrease in Revenue. The Revenue has decreased by -0.42% in the last year.
CMI shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.67% yearly.
EPS 1Y (TTM)18.76%
EPS 3Y13.63%
EPS 5Y7.79%
EPS Q2Q%16.86%
Revenue 1Y (TTM)-0.42%
Revenue growth 3Y12.39%
Revenue growth 5Y7.67%
Sales Q2Q%-2.73%
3.2 Future
Based on estimates for the next years, CMI will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.85% on average per year.
CMI is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.61% yearly.
EPS Next Y-1.66%
EPS Next 2Y5.89%
EPS Next 3Y7.72%
EPS Next 5Y8.85%
Revenue Next Year-2.18%
Revenue Next 2Y1.77%
Revenue Next 3Y2.45%
Revenue Next 5Y5.61%
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 stable.
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
A Price/Earnings ratio of 14.89 indicates a correct valuation of CMI.
82.81% of the companies in the same industry are more expensive than CMI, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 27.30, CMI is valued a bit cheaper.
Based on the Price/Forward Earnings ratio of 13.81, the valuation of CMI can be described as correct.
CMI's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. CMI is cheaper than 78.13% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of CMI to the average of the S&P500 Index (21.76), we can say CMI is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.89 | ||
| Fwd PE | 13.81 |
4.2 Price Multiples
79.69% of the companies in the same industry are more expensive than CMI, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, CMI is valued a bit more expensive than the industry average as 71.88% of the companies are valued more cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6506.33 | ||
| EV/EBITDA | 9.77 |
4.3 Compensation for Growth
The decent profitability rating of CMI may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.91
EPS Next 2Y5.89%
EPS Next 3Y7.72%
5. Dividend
5.1 Amount
CMI has a Yearly Dividend Yield of 2.19%.
CMI's Dividend Yield is rather good when compared to the industry average which is at 1.81. CMI pays more dividend than 86.72% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.37, CMI has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.19% |
5.2 History
On average, the dividend of CMI grows each year by 7.08%, 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)7.08%
Div Incr Years19
Div Non Decr Years20
5.3 Sustainability
CMI pays out 35.33% of its income as dividend. This is a sustainable payout ratio.
CMI's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP35.33%
EPS Next 2Y5.89%
EPS Next 3Y7.72%
330.75
+2.9 (+0.88%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners86.74%
Inst Owner Change0%
Ins Owners0.31%
Ins Owner Change7.55%
Market Cap45.54B
Analysts71.11
Price Target364.95 (10.34%)
Short Float %1.25%
Short Ratio2.19
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.19% |
Yearly Dividend6.94
Dividend Growth(5Y)7.08%
DP35.33%
Div Incr Years19
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)14.51%
Min EPS beat(2)8.66%
Max EPS beat(2)20.37%
EPS beat(4)4
Avg EPS beat(4)14.55%
Min EPS beat(4)8.34%
Max EPS beat(4)20.82%
EPS beat(8)4
Avg EPS beat(8)4.48%
EPS beat(12)6
Avg EPS beat(12)1.59%
EPS beat(16)8
Avg EPS beat(16)0.69%
Revenue beat(2)1
Avg Revenue beat(2)1.21%
Min Revenue beat(2)-1.21%
Max Revenue beat(2)3.63%
Revenue beat(4)3
Avg Revenue beat(4)1.94%
Min Revenue beat(4)-1.21%
Max Revenue beat(4)4.38%
Revenue beat(8)6
Avg Revenue beat(8)1.78%
Revenue beat(12)10
Avg Revenue beat(12)2.63%
Revenue beat(16)13
Avg Revenue beat(16)2.37%
PT rev (1m)1.91%
PT rev (3m)-8.02%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-7.71%
EPS NY rev (1m)-0.31%
EPS NY rev (3m)-6.68%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-3.34%
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)-4.19%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.89 | ||
| Fwd PE | 13.81 | ||
| P/S | 1.34 | ||
| P/FCF | 6506.33 | ||
| P/OCF | 37.7 | ||
| P/B | 4.17 | ||
| P/tB | 7.43 | ||
| EV/EBITDA | 9.77 |
EPS(TTM)22.22
EY6.72%
EPS(NY)23.95
Fwd EY7.24%
FCF(TTM)0.05
FCFY0.02%
OCF(TTM)8.77
OCFY2.65%
SpS245.99
BVpS79.33
TBVpS44.49
PEG (NY)N/A
PEG (5Y)1.91
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.54% | ||
| ROE | 25.42% | ||
| ROCE | 18.45% | ||
| ROIC | 11.32% | ||
| ROICexc | 12.5% | ||
| ROICexgc | 16.24% | ||
| OM | 11.42% | ||
| PM (TTM) | 8.2% | ||
| GM | 25.58% | ||
| FCFM | 0.02% |
ROA(3y)7.3%
ROA(5y)7.76%
ROE(3y)23.56%
ROE(5y)23.61%
ROIC(3y)10.13%
ROIC(5y)9.3%
ROICexc(3y)11.48%
ROICexc(5y)10.95%
ROICexgc(3y)15.52%
ROICexgc(5y)14.18%
ROCE(3y)16.61%
ROCE(5y)14.89%
ROICexcg growth 3Y9.39%
ROICexcg growth 5Y0.52%
ROICexc growth 3Y5.66%
ROICexc growth 5Y-1.01%
OM growth 3Y5.37%
OM growth 5Y0.23%
PM growth 3Y9.26%
PM growth 5Y3.83%
GM growth 3Y1.89%
GM growth 5Y-0.23%
F-Score6
Asset Turnover1.04
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 1069.71 | ||
| Debt/EBITDA | 1.38 | ||
| Cap/Depr | 112.35% | ||
| Cap/Sales | 3.55% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 24.47% | ||
| Profit Quality | 0.25% | ||
| Current Ratio | 1.34 | ||
| Quick Ratio | 0.81 | ||
| Altman-Z | 3.77 |
F-Score6
WACC9.56%
ROIC/WACC1.18
Cap/Depr(3y)116.24%
Cap/Depr(5y)110.58%
Cap/Sales(3y)3.46%
Cap/Sales(5y)3.31%
Profit Quality(3y)143.42%
Profit Quality(5y)123.85%
High Growth Momentum
Growth
EPS 1Y (TTM)18.76%
EPS 3Y13.63%
EPS 5Y7.79%
EPS Q2Q%16.86%
EPS Next Y-1.66%
EPS Next 2Y5.89%
EPS Next 3Y7.72%
EPS Next 5Y8.85%
Revenue 1Y (TTM)-0.42%
Revenue growth 3Y12.39%
Revenue growth 5Y7.67%
Sales Q2Q%-2.73%
Revenue Next Year-2.18%
Revenue Next 2Y1.77%
Revenue Next 3Y2.45%
Revenue Next 5Y5.61%
EBIT growth 1Y20.28%
EBIT growth 3Y18.42%
EBIT growth 5Y7.91%
EBIT Next Year37.82%
EBIT Next 3Y17.24%
EBIT Next 5Y12.91%
FCF growth 1Y-99.46%
FCF growth 3Y-42.53%
FCF growth 5Y-35.01%
OCF growth 1Y-47.32%
OCF growth 3Y-12.97%
OCF growth 5Y-14.11%