Taking everything into account, CMI scores 5 out of 10 in our fundamental rating. CMI was compared to 132 industry peers in the Machinery industry. While CMI has a great profitability rating, there are some minor concerns on its financial health. CMI is quite expensive at the moment. It does show a decent growth rate. Finally CMI also has an excellent dividend rating. With these ratings, CMI could be worth investigating further for dividend investing!.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

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.
In the past 5 years CMI has always been profitable.
CMI had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

CMI's Return On Assets of 7.93% is fine compared to the rest of the industry. CMI outperforms 74.24% of its industry peers.
CMI has a better Return On Equity (22.12%) than 90.15% of its industry peers.
CMI has a Return On Invested Capital of 10.92%. This is in the better half of the industry: CMI outperforms 75.76% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CMI is in line with the industry average of 10.24%.
The 3 year average ROIC (10.13%) for CMI is below the current ROIC(10.92%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	7.93%
ROE	22.12%
ROIC	10.92%

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

CMI's Profit Margin of 7.94% is fine compared to the rest of the industry. CMI outperforms 65.91% of its industry peers.
In the last couple of years the Profit Margin of CMI has grown nicely.
CMI has a better Operating Margin (12.01%) than 61.36% of its industry peers.
In the last couple of years the Operating Margin of CMI has remained more or less at the same level.
Looking at the Gross Margin, with a value of 25.94%, CMI is doing worse than 62.12% of the companies in the same industry.
CMI's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	12.01%
PM (TTM)	7.94%
GM	25.94%

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%

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ROA

ROE

ROIC

Operating and Profit Margin

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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.
Compared to 1 year ago, CMI has less shares outstanding
CMI has less shares outstanding than it did 5 years ago.
The debt/assets ratio for CMI is higher compared to a year ago.

2.2 Solvency

An Altman-Z score of 4.82 indicates that CMI is not in any danger for bankruptcy at the moment.
CMI has a better Altman-Z score (4.82) than 71.21% of its industry peers.
The Debt to FCF ratio of CMI is 3.34, which is a good value as it means it would take CMI, 3.34 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of CMI (3.34) is better than 65.91% 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.
Looking at the Debt to Equity ratio, with a value of 0.62, CMI is in line with its industry, outperforming 41.67% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.62
Debt/FCF	3.34
Altman-Z	4.82

ROIC/WACC1.14

WACC9.57%

2.3 Liquidity

CMI has a Current Ratio of 1.77. This is a normal value and indicates that CMI is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.77, CMI is doing worse than 61.36% of the companies in the same industry.
A Quick Ratio of 1.11 indicates that CMI should not have too much problems paying its short term obligations.
CMI's Quick ratio of 1.11 is in line compared to the rest of the industry. CMI outperforms 43.18% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.77
Quick Ratio	1.11

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

CMI shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 14.51%, 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 -1.80% in the last year.
The Revenue has been growing slightly by 7.67% on average over the past years.

EPS 1Y (TTM)14.51%

EPS 3Y13.63%

EPS 5Y7.79%

EPS Q2Q%-4.61%

Revenue 1Y (TTM)-1.8%

Revenue growth 3Y12.39%

Revenue growth 5Y7.67%

Sales Q2Q%-1.64%

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 15.75% on average per year.
CMI is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.43% yearly.

EPS Next Y9.11%

EPS Next 2Y11.26%

EPS Next 3Y13.49%

EPS Next 5Y15.75%

Revenue Next Year-1.24%

Revenue Next 2Y2.15%

Revenue Next 3Y4.3%

Revenue Next 5Y5.43%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better 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.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 24.73 indicates a rather expensive valuation of CMI.
CMI's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of CMI to the average of the S&P500 Index (27.21), we can say CMI is valued inline with the index average.
Based on the Price/Forward Earnings ratio of 21.62, the valuation of CMI can be described as rather expensive.
CMI's Price/Forward Earnings ratio is in line with the industry average.
When comparing the Price/Forward Earnings ratio of CMI to the average of the S&P500 Index (24.26), we can say CMI is valued inline with the index average.

		Industry Rank	Sector Rank
PE	24.73
Fwd PE	21.62

4.2 Price Multiples

The rest of the industry has a similar Enterprise Value to EBITDA ratio as CMI.
CMI's Price/Free Cash Flow is on the same level as the industry average.

		Industry Rank	Sector Rank
P/FCF	34.65
EV/EBITDA	16.32

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of CMI may justify a higher PE ratio.
A more expensive valuation may be justified as CMI's earnings are expected to grow with 13.49% in the coming years.

PEG (NY)2.71

PEG (5Y)3.18

EPS Next 2Y11.26%

EPS Next 3Y13.49%

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5. Dividend

5.1 Amount

CMI has a Yearly Dividend Yield of 1.39%. Purely for dividend investing, there may be better candidates out there.
CMI's Dividend Yield is a higher than the industry average which is at 0.98.
Compared to the average S&P500 Dividend Yield of 1.82, CMI is paying slightly less dividend.

		Industry Rank	Sector Rank
Dividend Yield	1.39%

5.2 History

On average, the dividend of CMI grows each year by 7.08%, which is quite nice.
CMI has paid a dividend for at least 10 years, which is 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

CMI pays out 38.53% of its income as dividend. This is a sustainable payout ratio.
The dividend of CMI is growing, but earnings are growing more, so the dividend growth is sustainable.

DP38.53%

EPS Next 2Y11.26%

EPS Next 3Y13.49%

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CUMMINS INC / CMI FAQ

What is the ChartMill fundamental rating of CUMMINS INC (CMI) stock?

ChartMill assigns a fundamental rating of 5 / 10 to CMI.

What is the valuation status of CUMMINS INC (CMI) stock?

ChartMill assigns a valuation rating of 3 / 10 to CUMMINS INC (CMI). This can be considered as Overvalued.

What is the profitability of CMI stock?

CUMMINS INC (CMI) has a profitability rating of 7 / 10.

What are the PE and PB ratios of CUMMINS INC (CMI) stock?

The Price/Earnings (PE) ratio for CUMMINS INC (CMI) is 24.73 and the Price/Book (PB) ratio is 6.54.

Can you provide the dividend sustainability for CMI stock?

The dividend rating of CUMMINS INC (CMI) is 7 / 10 and the dividend payout ratio is 38.53%.