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 129 industry peers in the Machinery industry. While CMI belongs to the best of the industry regarding profitability, there are concerns on its financial health. CMI has a valuation in line with the averages, but on the other hand it scores bad on growth. CMI also has an excellent dividend rating.
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.
In the past 5 years CMI has always been profitable.
Each year in the past 5 years CMI had a positive operating cash flow.
1.2 Ratios
The Return On Assets of CMI (12.51%) is better than 88.00% of its industry peers.
Looking at the Return On Equity, with a value of 38.42%, CMI belongs to the top of the industry, outperforming 93.60% of the companies in the same industry.
The Return On Invested Capital of CMI (11.25%) is better than 76.00% of its industry peers.
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 11.00%.
The last Return On Invested Capital (11.25%) for CMI is above the 3 year average (10.13%), which is a sign of increasing profitability.
| 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
CMI's Profit Margin of 11.57% is fine compared to the rest of the industry. CMI outperforms 78.40% of its industry peers.
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.
With a Gross Margin value of 25.07%, CMI is not doing good in the industry: 64.00% 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 | 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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), CMI is creating some value.
Compared to 1 year ago, CMI has less shares outstanding
Compared to 5 years ago, CMI has less shares outstanding
The debt/assets ratio for CMI is higher compared to a year ago.
2.2 Solvency
CMI has an Altman-Z score of 3.95. This indicates that CMI is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.95, CMI is in the better half of the industry, outperforming 65.60% of the companies in the same industry.
CMI has a debt to FCF ratio of 25.30. This is a negative value and a sign of low solvency as CMI would need 25.30 years to pay back of all of its debts.
With a Debt to FCF ratio value of 25.30, CMI is not doing good in the industry: 67.20% 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 68.80% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 25.3 | ||
| Altman-Z | 3.95 |
ROIC/WACC1.1
WACC10.19%
2.3 Liquidity
A Current Ratio of 1.31 indicates that CMI should not have too much problems paying its short term obligations.
CMI's Current ratio of 1.31 is on the low side compared to the rest of the industry. CMI is outperformed by 83.20% of its industry peers.
A Quick Ratio of 0.80 indicates that CMI may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.80, CMI is doing worse than 80.00% 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.
The Revenue has been growing slightly by 0.11% in the past 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)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.
The Revenue is expected to grow by 4.56% on average over the next years.
EPS Next Y7.18%
EPS Next 2Y13.43%
EPS Next 3Y7.54%
EPS Next 5Y3.09%
Revenue Next Year2.84%
Revenue Next 2Y5.49%
Revenue Next 3Y2.28%
Revenue Next 5Y4.56%
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
Based on the Price/Earnings ratio of 17.18, the valuation of CMI can be described as rather expensive.
Based on the Price/Earnings ratio, CMI is valued a bit cheaper than 75.20% of the companies in the same industry.
CMI is valuated rather cheaply when we compare the Price/Earnings ratio to 29.63, which is the current average of the S&P500 Index.
CMI is valuated correctly with a Price/Forward Earnings ratio of 16.03.
Based on the Price/Forward Earnings ratio, CMI is valued a bit cheaper than the industry average as 77.60% of the companies are valued more expensively.
CMI is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.68, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.18 | ||
| Fwd PE | 16.03 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CMI is valued a bit cheaper than 71.20% of the companies in the same industry.
CMI's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. CMI is more expensive than 68.80% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 180.8 | ||
| EV/EBITDA | 11.21 |
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.
CMI has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.39
PEG (5Y)2.21
EPS Next 2Y13.43%
EPS Next 3Y7.54%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.89%, CMI has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.65, CMI pays a better dividend. On top of this CMI pays more dividend than 86.40% of the companies listed in the same industry.
CMI's Dividend Yield is comparable with the S&P500 average which is at 2.27.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.89% |
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 24.56% of its income as dividend. This is a sustainable payout ratio.
CMI's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP24.56%
EPS Next 2Y13.43%
EPS Next 3Y7.54%
366.92
-17.47 (-4.54%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners86.78%
Inst Owner Change-86.69%
Ins Owners0.28%
Ins Owner Change1.82%
Market Cap50.44B
Analysts71.43
Price Target410.28 (11.82%)
Short Float %0.95%
Short Ratio1.7
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.89% |
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)4.25%
PT rev (3m)11.37%
EPS NQ rev (1m)-1.45%
EPS NQ rev (3m)-6.47%
EPS NY rev (1m)1.14%
EPS NY rev (3m)2.72%
Revenue NQ rev (1m)2.32%
Revenue NQ rev (3m)-0.22%
Revenue NY rev (1m)0.16%
Revenue NY rev (3m)0.19%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.18 | ||
| Fwd PE | 16.03 | ||
| P/S | 1.48 | ||
| P/FCF | 180.8 | ||
| P/OCF | 33.92 | ||
| P/B | 4.91 | ||
| P/tB | 9.09 | ||
| EV/EBITDA | 11.21 |
EPS(TTM)21.36
EY5.82%
EPS(NY)22.89
Fwd EY6.24%
FCF(TTM)2.03
FCFY0.55%
OCF(TTM)10.82
OCFY2.95%
SpS248.05
BVpS74.71
TBVpS40.37
PEG (NY)2.39
PEG (5Y)2.21
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 | 3.95 |
F-Score6
WACC10.19%
ROIC/WACC1.1
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 Y7.18%
EPS Next 2Y13.43%
EPS Next 3Y7.54%
EPS Next 5Y3.09%
Revenue 1Y (TTM)0.11%
Revenue growth 3Y12.39%
Revenue growth 5Y7.67%
Sales Q2Q%-1.12%
Revenue Next Year2.84%
Revenue Next 2Y5.49%
Revenue Next 3Y2.28%
Revenue Next 5Y4.56%
EBIT growth 1Y10.26%
EBIT growth 3Y18.42%
EBIT growth 5Y7.91%
EBIT Next Year42.16%
EBIT Next 3Y11.58%
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%