CUMMINS INC (CMI) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:CMI - US2310211063 - Common Stock
546.76 USD
+15.06 (+2.83%)
547.58 USD
+0.82 (+0.15%)
We assign a fundamental rating of 5 out of 10 to CMI. CMI was compared to 132 industry peers in the Machinery industry. While CMI belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. While showing a medium growth rate, CMI is valued expensive at the moment. CMI also has an excellent dividend rating. With these ratings, CMI could be worth investigating further for dividend investing!.
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.
CMI had positive earnings in each of the past 5 years.
Each year in the past 5 years CMI had a positive operating cash flow.
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.
The Return On Equity of CMI (22.12%) is better than 90.15% of its industry peers.
Looking at the Return On Invested Capital, with a value of 10.92%, CMI is in the better half of the industry, outperforming 75.76% of the companies in the same industry.
CMI had an Average Return On Invested Capital over the past 3 years of 10.13%. This is in line with the industry average of 10.21%.
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 has a Profit Margin of 7.94%. This is in the better half of the industry: CMI outperforms 65.91% of its industry peers.
CMI's Profit Margin has improved in the last couple of years.
CMI has a Operating Margin of 12.01%. This is in the better half of the industry: CMI outperforms 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.
CMI's Gross Margin of 25.94% is on the low side compared to the rest of the industry. CMI is outperformed by 62.12% of its industry peers.
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%
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 4.62. This indicates that CMI is financially healthy and has little risk of bankruptcy at the moment.
CMI has a Altman-Z score of 4.62. This is in the better half of the industry: CMI outperforms 70.45% of its industry peers.
CMI has a debt to FCF ratio of 3.34. This is a good value and a sign of high solvency as CMI would need 3.34 years to pay back of all of its debts.
CMI has a Debt to FCF ratio of 3.34. This is in the better half of the industry: CMI outperforms 66.67% of its industry peers.
A Debt/Equity ratio of 0.62 indicates that CMI is somewhat dependend on debt financing.
CMI's Debt to Equity ratio of 0.62 is in line compared to the rest of the industry. CMI outperforms 40.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 3.34 | ||
| Altman-Z | 4.62 |
ROIC/WACC1.16
WACC9.43%
2.3 Liquidity
A Current Ratio of 1.77 indicates that CMI should not have too much problems paying its short term obligations.
CMI has a Current ratio of 1.77. This is in the lower half of the industry: CMI underperforms 62.12% of its industry peers.
CMI has a Quick Ratio of 1.11. This is a normal value and indicates that CMI is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of CMI (1.11) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.77 | ||
| Quick Ratio | 1.11 |
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.
Measured over the past 5 years, CMI shows a small growth in Earnings Per Share. The EPS has been growing by 7.79% on average per year.
The Revenue has decreased by -1.80% in the past 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 15.06% 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 5Y15.06%
Revenue Next Year-1.22%
Revenue Next 2Y2.05%
Revenue Next 3Y4.21%
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.
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
Based on the Price/Earnings ratio of 23.65, the valuation of CMI can be described as rather expensive.
Based on the Price/Earnings ratio, CMI is valued a bit cheaper than the industry average as 60.61% of the companies are valued more expensively.
CMI's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.17.
With a Price/Forward Earnings ratio of 20.68, CMI is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of CMI is on the same level as its industry peers.
CMI is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 23.79, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.65 | ||
| Fwd PE | 20.68 |
4.2 Price Multiples
CMI's Enterprise Value to EBITDA ratio is in line with the industry average.
CMI's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 33.13 | ||
| EV/EBITDA | 14.94 |
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)2.6
PEG (5Y)3.04
EPS Next 2Y11.26%
EPS Next 3Y13.49%
5. Dividend
5.1 Amount
CMI has a Yearly Dividend Yield of 1.57%. 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 0.85.
Compared to an average S&P500 Dividend Yield of 1.94, CMI has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.57% |
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
38.53% of the earnings are spent on dividend by CMI. This is a low number and 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%
546.76
+15.06 (+2.83%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners87.23%
Inst Owner Change0%
Ins Owners0.3%
Ins Owner Change-0.92%
Market Cap75.47B
Revenue(TTM)33.58B
Net Income(TTM)2.67B
Analysts74.81
Price Target541.33 (-0.99%)
Short Float %1.13%
Short Ratio1.64
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.57% |
Yearly Dividend6.94
Dividend Growth(5Y)7.08%
DP38.53%
Div Incr Years19
Div Non Decr Years20
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)19.52%
Min EPS beat(2)15.01%
Max EPS beat(2)24.03%
EPS beat(4)4
Avg EPS beat(4)17.02%
Min EPS beat(4)8.66%
Max EPS beat(4)24.03%
EPS beat(8)6
Avg EPS beat(8)10.42%
EPS beat(12)7
Avg EPS beat(12)7.35%
EPS beat(16)9
Avg EPS beat(16)3.53%
Revenue beat(2)2
Avg Revenue beat(2)2.37%
Min Revenue beat(2)1.44%
Max Revenue beat(2)3.3%
Revenue beat(4)3
Avg Revenue beat(4)1.79%
Min Revenue beat(4)-1.21%
Max Revenue beat(4)3.63%
Revenue beat(8)6
Avg Revenue beat(8)1.86%
Revenue beat(12)10
Avg Revenue beat(12)2.42%
Revenue beat(16)13
Avg Revenue beat(16)2.57%
PT rev (1m)9.59%
PT rev (3m)28.68%
EPS NQ rev (1m)0.71%
EPS NQ rev (3m)6.9%
EPS NY rev (1m)0.03%
EPS NY rev (3m)3.82%
Revenue NQ rev (1m)0.05%
Revenue NQ rev (3m)0.17%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)1.15%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.65 | ||
| Fwd PE | 20.68 | ||
| P/S | 2.25 | ||
| P/FCF | 33.13 | ||
| P/OCF | 21.51 | ||
| P/B | 6.26 | ||
| P/tB | 10.07 | ||
| EV/EBITDA | 14.94 |
EPS(TTM)23.12
EY4.23%
EPS(NY)26.44
Fwd EY4.84%
FCF(TTM)16.5
FCFY3.02%
OCF(TTM)25.42
OCFY4.65%
SpS243.27
BVpS87.39
TBVpS54.31
PEG (NY)2.6
PEG (5Y)3.04
Graham Number213.22
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.93% | ||
| ROE | 22.12% | ||
| ROCE | 16.67% | ||
| ROIC | 10.92% | ||
| ROICexc | 12.51% | ||
| ROICexgc | 15.85% | ||
| OM | 12.01% | ||
| PM (TTM) | 7.94% | ||
| GM | 25.94% | ||
| FCFM | 6.78% |
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%
ROICexgc growth 3Y9.39%
ROICexgc 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
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 3.34 | ||
| Debt/EBITDA | 1.46 | ||
| Cap/Depr | 112.32% | ||
| Cap/Sales | 3.67% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 68.43% | ||
| Profit Quality | 85.38% | ||
| Current Ratio | 1.77 | ||
| Quick Ratio | 1.11 | ||
| Altman-Z | 4.62 |
F-Score6
WACC9.43%
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)14.51%
EPS 3Y13.63%
EPS 5Y7.79%
EPS Q2Q%-4.61%
EPS Next Y9.11%
EPS Next 2Y11.26%
EPS Next 3Y13.49%
EPS Next 5Y15.06%
Revenue 1Y (TTM)-1.8%
Revenue growth 3Y12.39%
Revenue growth 5Y7.67%
Sales Q2Q%-1.64%
Revenue Next Year-1.22%
Revenue Next 2Y2.05%
Revenue Next 3Y4.21%
Revenue Next 5Y5.43%
EBIT growth 1Y17.83%
EBIT growth 3Y18.42%
EBIT growth 5Y7.91%
EBIT Next Year45.97%
EBIT Next 3Y21.43%
EBIT Next 5Y19.2%
FCF growth 1Y3.03%
FCF growth 3Y-42.53%
FCF growth 5Y-35.01%
OCF growth 1Y5.57%
OCF growth 3Y-12.97%
OCF growth 5Y-14.11%
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 23.65 and the Price/Book (PB) ratio is 6.26.
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%.