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Cummins (CMI)
NYSE:CMI
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Cummins
(NYSE:CMI)72Outperform
Positive Factors
Margin Expansion
The margin expansion story is continuing to build, which is accentuated by CMI expecting to grow margins in its Engine segment through operational improvement.
Power Generation Growth
PS reported Q4 EBITDA of $314mn, up 73% YoY on a 22% sales gain, driven by strong demand for power generation from data centers.
Negative Factors
Customer Demand Uncertainty
CMI has seen some slowing in customer demand and uncertainty around incentives in its Accelera business.
Emission Regulations Risk
There is a risk that emissions uncertainty may delay fleet purchases, affecting the truck recovery thesis.
Cummins (CMI) vs. S&P 500 (SPY)
Market Cap
$47.75B
Dividend Yield2.06%
Average Volume (3M)913.30K
Price to Earnings (P/E)12.2
Beta (1Y)1.02
Revenue Growth0.14%
EPS Growth444.36%
CountryUS
Employees69,600
SectorIndustrials
Sector Strength66
IndustryIndustrial Goods
Share Statistics
EPS (TTM)28.17
Shares Outstanding137,481,170
10 Day Avg. Volume843,207
30 Day Avg. Volume913,303
Financial Highlights & Ratios
PEG Ratio0.03
Price to Book (P/B)N/A
Price to Sales (P/S)1.44
Price to Cash Flow (P/CF)8.60
P/FCF Ratio8.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$403.27Price Target Upside16.11% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
Cummins Business Overview & Revenue Model
Company DescriptionFounded in 1919 and based in Indiana, Cummins, Inc. designs, manufactures and markets diesel and natural gas engines. It operates through five segments: Engine, Distribution, Components, Power Systems and New Power.
How the Company Makes MoneyCummins Inc. generates revenue through several key streams. The largest portion of its revenue comes from the sale of engines and related components to original equipment manufacturers (OEMs) and distributors worldwide. This includes advanced diesel and natural gas engines for on-highway and off-highway vehicles. Another significant revenue stream is the power systems segment, which includes sales from generators and alternative energy solutions, such as hybrid and electric power products. Additionally, Cummins earns from its components segment, which offers after-treatment systems, turbochargers, and filtration products. The distribution segment provides aftermarket services and parts sales, enhancing customer support and extending product lifecycles. Cummins has established significant partnerships with OEMs and other industry players to expand its market reach and leverage its technological advancements, contributing to its overall earnings growth.
Cummins Financial Statement Overview
Summary
Cummins exhibits strong profitability with significant improvements in net profit and EBITDA margins, indicating efficient cost management and stable revenue growth. However, there is room for improvement in cash flow conversion and growth.Income Statement
Cummins demonstrates strong profitability with a consistent gross profit margin of around 24.6% for TTM (Trailing-Twelve-Months). The net profit margin improved significantly to 11.6% from 2.2% the previous year, showcasing enhanced cost efficiency and profitability. Revenue growth is stable, with a slight increase of 0.1% in the TTM compared to the previous year, indicating steady demand in its market. The EBIT and EBITDA margins also show a healthy improvement, indicating strong operational performance.85
Very Positive
Balance Sheet
Cummins maintains a stable financial position with a debt-to-equity ratio of 0.65, reflecting prudent leverage levels. The return on equity (ROE) stands at an impressive 38.4% for TTM, highlighting effective use of shareholder funds to generate profit. The equity ratio is a solid 32.6%, suggesting a balanced capital structure and strong asset base.78
Positive
Cash Flow
The operating cash flow to net income ratio is 0.38, indicating a moderate conversion of income to cash flows. However, the free cash flow growth rate is marginal at 1.3%, signaling limited growth in cash generation. The free cash flow to net income ratio of 0.07 suggests room for improvement in cash flow management.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 34.10B | 34.06B | 28.07B | 24.02B | 19.81B | Gross Profit |
| 8.44B | 8.25B | 6.72B | 5.70B | 4.89B | EBIT |
| 3.75B | 1.76B | 2.23B | 2.71B | 1.76B | EBITDA |
| 6.34B | 3.02B | 3.80B | 2.86B | 3.13B | Net Income Common Stockholders |
| 3.95B | 735.00M | 2.15B | 2.13B | 1.79B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.26B | 2.74B | 2.57B | 3.19B | 3.86B | Total Assets |
| 31.54B | 32.01B | 30.30B | 23.71B | 22.62B | Total Debt |
| 7.60B | 7.21B | 7.86B | 4.16B | 4.16B | Net Debt |
| 5.93B | 5.03B | 5.75B | 1.57B | 763.00M | Total Liabilities |
| 20.23B | 22.10B | 20.07B | 14.31B | 13.63B | Stockholders Equity |
| 10.27B | 8.85B | 8.97B | 8.47B | 8.06B |
| Cash Flow | Free Cash Flow | |||
| 279.00M | 2.75B | 1.05B | 1.47B | 2.15B | Operating Cash Flow |
| 1.49B | 3.97B | 1.96B | 2.26B | 2.72B | Investing Cash Flow |
| -1.78B | -1.64B | -4.17B | -873.00M | -719.00M | Financing Cash Flow |
| -173.00M | -2.18B | 1.67B | -2.23B | 280.00M |
Cummins Technical Analysis
Negative
347.32
Price Trends
359.90
Negative
355.61
Negative
322.16
Positive
Market Momentum
-2.05
Positive
38.69
Neutral
10.64
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CMI, the sentiment is Negative. The current price of 347.32 is below the 20-day moving average (MA) of 366.66, below the 50-day MA of 359.90, and above the 200-day MA of 322.16, indicating a neutral trend. The MACD of -2.05 indicates Positive momentum. The RSI at 38.69 is Neutral, neither overbought nor oversold. The STOCH value of 10.64 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CMI.
Cummins Risk Analysis
Cummins disclosed 30 risk factors in its most recent earnings report. Cummins reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cummins Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $6.15B | 9.21 | 16.14% | 1.94% | 11.36% | 13.78% | |
74 Outperform | $124.41B | 20.32 | 27.66% | 1.31% | -20.93% | -34.33% | |
74 Outperform | $53.26B | 12.84 | 23.77% | 1.21% | -4.29% | -9.76% | |
72 Outperform | $47.75B | 12.24 | 38.42% | 2.06% | 0.14% | 444.36% | |
66 Neutral | $156.16B | 14.82 | 55.36% | 1.69% | -3.36% | 9.59% | |
64 Neutral | $2.00B | ― | -4.28% | 2.90% | -2.57% | -248.28% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
CMI
Cummins
347.32
79.70
29.78%
CAT
Caterpillar
338.49
7.84
2.37%
DAN
Dana Holding
14.43
2.46
20.55%
DE
Deere
467.50
106.31
29.43%
OSK
Oshkosh
96.04
-13.35
-12.20%
PCAR
Paccar
102.97
-7.97
-7.18%
Cummins Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: 0.22% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted Cummins' record financial performance and strategic advancements, despite challenges in the North America heavy-duty truck market and reorganization costs in the Accelera segment. The company remains optimistic about future opportunities, particularly in the Power Systems segment, while navigating regulatory and market uncertainties.Highlights
Record Full Year Financial Performance
Cummins Inc. delivered record revenues of $34.1 billion and a record EBITDA of $6.3 billion in 2024, despite a decline in the North America heavy-duty truck market and the separation of Atmus.
Power Systems Segment Success
The Power Systems segment achieved a record full year EBITDA of 18.4% of sales, up from 14.7% in 2023, driven by strong demand in data center applications and operational improvements.
Strategic Advancements and Partnerships
Cummins introduced the HELM engine platform, offering fuel flexibility, and completed a joint venture, Amplify Cell Technologies, to advance zero emissions technology. These actions align with their Destination Zero strategy.
Successful Separation of Atmus Filtration Technologies
The separation resulted in a tax-free exchange of shares, reducing Cummins' shares outstanding by approximately 5.6 million, enabling a focus on innovative power solutions.
Lowlights
Decline in North America Heavy-Duty Truck Market
Revenues were impacted by lower North America heavy-duty truck volumes, contributing to a 1% decrease in overall revenues for the fourth quarter compared to 2023.
Accelera Business Segment Reorganization
Charges of $312 million were recorded due to a strategic reorganization of the Accelera segment, impacting EBITDA margins and reflecting slowing demand in zero-emission solutions.
Uncertain Demand in China and Regulatory Challenges
Cummins projects a range of outcomes for the China truck market, with no meaningful recovery seen yet, and anticipates potential challenges over greenhouse gas regulations.
Company Guidance
During the Cummins Inc. Q4 2024 Earnings Conference Call, the company provided guidance for 2025, projecting total company revenues to range from a decline of 2% to an increase of 3% compared to 2024. The EBITDA margin is expected to improve to between 16.2% and 17.2% of sales, up from 15.7% in 2024. The guidance anticipates weaker demand in the first half of 2025 for the North America on-highway truck markets, with heavy-duty truck production projected at 260,000 to 290,000 units, flat to down 10% year-over-year. However, demand for power systems is expected to remain robust, with power generation market revenues projected to grow by 5% to 15%. The company also plans to invest $1.4 billion to $1.5 billion in capital projects and expects an effective tax rate of 24.5%, excluding any discrete items.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.