Cummins Inc.
Cummins Inc. Fundamental Analysis
Cummins Inc. (CMI) shows moderate financial fundamentals with a PE ratio of 28.52, profit margin of 8.44%, and ROE of 24.13%. The company generates $33.7B in annual revenue with weak year-over-year growth of -1.27%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 62.3/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze CMI's fundamental strength across five key dimensions:
Efficiency Score
WeakCMI struggles to generate sufficient returns from assets.
Valuation Score
WeakCMI trades at a premium to fair value.
Growth Score
WeakCMI faces weak or negative growth trends.
Financial Health Score
ExcellentCMI maintains a strong and stable balance sheet.
Profitability Score
ModerateCMI maintains healthy but balanced margins.
Key Financial Metrics
Is CMI Expensive or Cheap?
P/E Ratio
CMI trades at 28.52 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, CMI's PEG of 4.42 indicates potential overvaluation.
Price to Book
The market values Cummins Inc. at 6.57 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 14.08 times EBITDA. This signals the market has high growth expectations.
How Well Does CMI Make Money?
Net Profit Margin
For every $100 in sales, Cummins Inc. keeps $8.44 as profit after all expenses.
Operating Margin
Core operations generate 11.87 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $24.13 in profit for every $100 of shareholder equity.
ROA
Cummins Inc. generates $8.36 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Cummins Inc. produces operating cash flow of $3.62B, showing steady but balanced cash generation.
Free Cash Flow
Cummins Inc. produces free cash flow of $2.39B, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $17.26 in free cash annually.
FCF Yield
CMI converts 2.95% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
28.52
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
4.42
vs 25 benchmark
P/B Ratio
Price to book value ratio
6.57
vs 25 benchmark
P/S Ratio
Price to sales ratio
2.41
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.66
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.76
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.24
vs 25 benchmark
ROA
Return on assets percentage
0.08
vs 25 benchmark
ROCE
Return on capital employed
0.16
vs 25 benchmark
How CMI Stacks Against Its Sector Peers
| Metric | CMI Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 28.52 | 26.49 | Neutral |
| ROE | 24.13% | 1307.00% | Weak |
| Net Margin | 8.44% | -5131.00% (disorted) | Weak |
| Debt/Equity | 0.66 | 0.81 | Neutral |
| Current Ratio | 1.76 | 10.48 | Neutral |
| ROA | 8.36% | -1549793.00% (disorted) | Weak |
CMI outperforms its industry in 0 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Cummins Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
82.65%
Industry Style: Cyclical, Value, Infrastructure
High GrowthEPS CAGR
70.79%
Industry Style: Cyclical, Value, Infrastructure
High GrowthFCF CAGR
42.96%
Industry Style: Cyclical, Value, Infrastructure
High Growth