CUMMINS INC (CMI) Stock Fundamental Analysis
NYSE:CMI - New York Stock Exchange, Inc. - US2310211063 - Common Stock - Currency: USD
Taking everything into account, CMI scores 5 out of 10 in our fundamental rating. 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 valuation in line with the averages, but it does not seem to be growing. CMI also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year CMI was profitable.
In the past year CMI had a positive cash flow from operations.
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
Looking at the Return On Assets, with a value of 12.51%, CMI belongs to the top of the industry, outperforming 89.06% of the companies in the same industry.
CMI's Return On Equity of 38.42% is amongst the best of the industry. CMI outperforms 94.53% of its industry peers.
CMI's Return On Invested Capital of 11.25% is fine compared to the rest of the industry. CMI outperforms 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 10.67%.
The 3 year average ROIC (10.13%) for CMI is below the current ROIC(11.25%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.51% | ||
| ROE | 38.42% | ||
| ROIC | 11.25% |
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
With a decent Profit Margin value of 11.57%, CMI is doing good in the industry, outperforming 77.34% of the companies in the same industry.
CMI's Profit Margin has improved in the last couple of years.
CMI has a Operating Margin (10.74%) which is in line with its industry peers.
In the last couple of years the Operating Margin of CMI has remained more or less at the same level.
CMI has a Gross Margin of 25.07%. This is in the lower half of the industry: CMI underperforms 62.50% 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 | 10.74% | ||
| PM (TTM) | 11.57% | ||
| GM | 25.07% |
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
CMI has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
The number of shares outstanding for CMI has been reduced compared to 1 year ago.
CMI has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, CMI has a worse debt to assets ratio.
2.2 Solvency
CMI has an Altman-Z score of 3.62. This indicates that CMI is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of CMI (3.62) is better than 64.06% of its industry peers.
The Debt to FCF ratio of CMI is 25.30, which is on the high side as it means it would take CMI, 25.30 years of fcf income to pay off all of its debts.
With a Debt to FCF ratio value of 25.30, CMI is not doing good in the industry: 66.41% of the companies in the same industry are doing better.
CMI has a Debt/Equity ratio of 0.62. This is a neutral value indicating CMI is somewhat dependend on debt financing.
The Debt to Equity ratio of CMI (0.62) is worse than 63.28% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 25.3 | ||
| Altman-Z | 3.62 |
ROIC/WACC1.16
WACC9.74%
2.3 Liquidity
CMI has a Current Ratio of 1.31. 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 worse Current ratio (1.31) than 84.38% of its industry peers.
CMI has a Quick Ratio of 1.31. This is a bad value and indicates that CMI is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.80, CMI is doing worse than 78.13% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.31 | ||
| Quick Ratio | 0.8 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 11.48% over the past year.
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 small growth in Revenue. The Revenue has grown by 0.11% in the last year.
The Revenue has been growing slightly by 7.67% on average over the past years.
EPS 1Y (TTM)11.48%
EPS 3Y13.63%
EPS 5Y7.79%
EPS Q2Q%29.47%
Revenue 1Y (TTM)0.11%
Revenue growth 3Y12.39%
Revenue growth 5Y7.67%
Sales Q2Q%-1.12%
3.2 Future
Based on estimates for the next years, CMI will show a small growth in Earnings Per Share. The EPS will grow by 3.09% on average per year.
CMI is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.96% yearly.
EPS Next Y5.38%
EPS Next 2Y11.3%
EPS Next 3Y7.38%
EPS Next 5Y3.09%
Revenue Next Year1.37%
Revenue Next 2Y4.11%
Revenue Next 3Y2.27%
Revenue Next 5Y5.96%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 13.19, CMI is valued correctly.
CMI's Price/Earnings ratio is a bit cheaper when compared to the industry. CMI is cheaper than 78.91% of the companies in the same industry.
CMI is valuated cheaply when we compare the Price/Earnings ratio to 28.29, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 12.52, which indicates a correct valuation of CMI.
Based on the Price/Forward Earnings ratio, CMI is valued cheaply inside the industry as 81.25% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 21.08. CMI is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.19 | ||
| Fwd PE | 12.52 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CMI is valued a bit cheaper than the industry average as 74.22% of the companies are valued more expensively.
CMI's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. CMI is more expensive than 68.75% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 139.13 | ||
| EV/EBITDA | 8.76 |
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.
PEG (NY)2.45
PEG (5Y)1.69
EPS Next 2Y11.3%
EPS Next 3Y7.38%
5. Dividend
5.1 Amount
CMI has a Yearly Dividend Yield of 2.58%. Purely for dividend investing, there may be better candidates out there.
In the last 3 months the price of CMI has falen by -23.07%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
Compared to an average industry Dividend Yield of 2.12, CMI pays a better dividend. On top of this CMI pays more dividend than 88.28% of the companies listed in the same industry.
CMI's Dividend Yield is comparable with the S&P500 average which is at 2.52.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.58% |
5.2 History
The dividend of CMI is nicely growing with an annual growth rate of 7.08%!
CMI has been paying a dividend for at least 10 years, so it has a reliable track record.
CMI has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)7.08%
Div Incr Years19
Div Non Decr Years20
5.3 Sustainability
24.56% of the earnings are spent on dividend by CMI. This is a low number and sustainable payout ratio.
CMI's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP24.56%
EPS Next 2Y11.3%
EPS Next 3Y7.38%
281.81
+1.25 (+0.45%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners86.78%
Inst Owner Change0%
Ins Owners0.28%
Ins Owner Change8.24%
Market Cap38.82B
Analysts72.14
Price Target396.75 (40.79%)
Short Float %1.15%
Short Ratio1.75
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.58% |
Yearly Dividend6.94
Dividend Growth(5Y)7.08%
DP24.56%
Div Incr Years19
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)14.74%
Min EPS beat(2)8.66%
Max EPS beat(2)20.82%
EPS beat(4)3
Avg EPS beat(4)9.07%
Min EPS beat(4)-1.53%
Max EPS beat(4)20.82%
EPS beat(8)4
Avg EPS beat(8)3.9%
EPS beat(12)6
Avg EPS beat(12)0.94%
EPS beat(16)8
Avg EPS beat(16)0.37%
Revenue beat(2)2
Avg Revenue beat(2)2.29%
Min Revenue beat(2)0.94%
Max Revenue beat(2)3.63%
Revenue beat(4)3
Avg Revenue beat(4)1.85%
Min Revenue beat(4)-1.54%
Max Revenue beat(4)4.38%
Revenue beat(8)7
Avg Revenue beat(8)2.34%
Revenue beat(12)11
Avg Revenue beat(12)3.14%
Revenue beat(16)14
Avg Revenue beat(16)3.23%
PT rev (1m)-3.9%
PT rev (3m)0.81%
EPS NQ rev (1m)-1.95%
EPS NQ rev (3m)-3.63%
EPS NY rev (1m)-1.68%
EPS NY rev (3m)-0.56%
Revenue NQ rev (1m)-0.14%
Revenue NQ rev (3m)2.19%
Revenue NY rev (1m)-1.35%
Revenue NY rev (3m)-1.46%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.19 | ||
| Fwd PE | 12.52 | ||
| P/S | 1.14 | ||
| P/FCF | 139.13 | ||
| P/OCF | 26.1 | ||
| P/B | 3.78 | ||
| P/tB | 6.99 | ||
| EV/EBITDA | 8.76 |
EPS(TTM)21.36
EY7.58%
EPS(NY)22.51
Fwd EY7.99%
FCF(TTM)2.03
FCFY0.72%
OCF(TTM)10.8
OCFY3.83%
SpS247.58
BVpS74.57
TBVpS40.29
PEG (NY)2.45
PEG (5Y)1.69
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.51% | ||
| ROE | 38.42% | ||
| ROCE | 18.04% | ||
| ROIC | 11.25% | ||
| ROICexc | 12.55% | ||
| ROICexgc | 16.51% | ||
| OM | 10.74% | ||
| PM (TTM) | 11.57% | ||
| GM | 25.07% | ||
| FCFM | 0.82% |
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 Turnover1.08
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 25.3 | ||
| Debt/EBITDA | 1.35 | ||
| Cap/Depr | 113.43% | ||
| Cap/Sales | 3.54% | ||
| Interest Coverage | 10.97 | ||
| Cash Conversion | 31.44% | ||
| Profit Quality | 7.07% | ||
| Current Ratio | 1.31 | ||
| Quick Ratio | 0.8 | ||
| Altman-Z | 3.62 |
F-Score6
WACC9.74%
ROIC/WACC1.16
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)11.48%
EPS 3Y13.63%
EPS 5Y7.79%
EPS Q2Q%29.47%
EPS Next Y5.38%
EPS Next 2Y11.3%
EPS Next 3Y7.38%
EPS Next 5Y3.09%
Revenue 1Y (TTM)0.11%
Revenue growth 3Y12.39%
Revenue growth 5Y7.67%
Sales Q2Q%-1.12%
Revenue Next Year1.37%
Revenue Next 2Y4.11%
Revenue Next 3Y2.27%
Revenue Next 5Y5.96%
EBIT growth 1Y10.26%
EBIT growth 3Y18.42%
EBIT growth 5Y7.91%
EBIT Next Year44.83%
EBIT Next 3Y16.04%
EBIT Next 5Y7.38%
FCF growth 1Y-89.87%
FCF growth 3Y-42.53%
FCF growth 5Y-35.01%
OCF growth 1Y-62.51%
OCF growth 3Y-12.97%
OCF growth 5Y-14.11%