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1. Company Snapshot

1.a. Company Description

Cummins Inc.designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide.It operates through five segments: Engine, Distribution, Components, Power Systems, and New Power.


The company offers diesel and natural gas-powered engines under the Cummins and other customer brands for the heavy and medium-duty truck, bus, recreational vehicle, light-duty automotive, construction, mining, marine, rail, oil and gas, defense, and agricultural markets; and offers new parts and services, as well as remanufactured parts and engines.It also provides power generation systems, high-horsepower engines, heavy and medium duty engines, application engineering services, custom-designed assemblies, retail and wholesale aftermarket parts, and in-shop and field-based repair services.In addition, the company offers emission solutions; turbochargers; air and fuel filters, fuel water separators, lube and hydraulic filters, coolants, fuel additives, and other filtration systems; and electronic control modules, sensors, and supporting software, as well as new, replacement, and remanufactured fuel systems.


Further, it provides automated transmissions; standby and prime power generators, controls, paralleling systems, and transfer switches, as well as A/C generator/alternator products under the Stamford and AVK brands; and electrified power systems with components and subsystems, including battery, fuel cell, and hydrogen production technologies.Additionally, it offers filtration, aftertreatment, controls systems, air handling systems, automated transmissions, electric power generation systems, and batteries.The company sells its products to original equipment manufacturers, distributors, dealers, and other customers.


The company was formerly known as Cummins Engine Company and changed its name to Cummins Inc.in 2001.Cummins Inc.


was founded in 1919 and is headquartered in Columbus, Indiana.

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1.b. Last Insights on CMI

Cummins Inc.'s recent performance was positively driven by its resilient Q4 2025 earnings, with revenue growing 1% to $8.5 billion and EBITDA reaching $1.2 billion. The company's ability to navigate market challenges and deliver a solid financial performance was highlighted in its earnings call. Additionally, several institutional investors, including CX Institutional and Advisors Asset Management Inc., have increased their stakes in the company. Cummins also received a "Moderate Buy" rating from brokerages, with 13 firms assigning a buy rating. Its Q4 earnings beat expectations, with EPS of $5.81 per share.

1.c. Company Highlights

2. Cummins' 2025 Earnings: A Resilient Performance Amidst Challenging Market Conditions

Cummins Inc. reported a robust financial performance in 2025, with revenues of $33.7 billion, down 1% from 2024, and EBITDA of $5.4 billion or 16% of sales. Excluding one-time items, EBITDA was a record $5.8 billion or 17.4% of sales, driven by higher power generation volumes, pricing, and improved operational efficiency. The company's net earnings for 2025 were $2.8 billion or $20.50 per diluted share, compared to $3.9 billion or $28.37 per diluted share in 2024. Notably, the actual EPS came out at $5.84, beating estimates of $5.1.

Publication Date: Feb -06

📋 Highlights
  • EBITDA Margin Improvement:: Excluding one-time items, 2025 EBITDA reached 17.4% ($5.8B), driven by higher power generation volumes and cost efficiencies.
  • Fourth Quarter EBITDA Growth:: Q4 EBITDA hit $1.4B (16% of sales) after excluding electrolyzer review charges, up from $1.2B (13.5%) previously.
  • 2026 Revenue and Margin Guidance:: Company forecasts 3-8% revenue growth and 17-18% EBITDA margins, with Power Systems expected to grow 12-17% (23-24% EBITDA).
  • Strong Power Systems Performance:: 2025 Power Systems revenue hit $7.5B (up 16%) with a record 22.7% EBITDA margin.
  • Shareholder Returns:: $1.1B returned via dividends in 2025, with a target to allocate 50% of operating cash flow to shareholders in 2026.

Segmental Performance

The company's operating segment results, excluding electrolyzer strategic review costs, were mixed. The Engine segment revenues were $10.9 billion, down 7% from the previous year, with EBITDA at 12.7% of sales. The Component segment revenues were $10.1 billion, down 10%, with EBITDA at 13.8%. In contrast, the Distribution segment revenues increased 9% to a record $12.4 billion, with EBITDA at a record 14.6%. The Power Systems segment revenues were a record $7.5 billion, up 16%, with EBITDA at a record 22.7%.

Outlook and Guidance

Cummins is forecasting total company revenues for 2026 to be up 3% to 8% compared to 2025, and EBITDA to be 17% to 18% of sales. The company expects North America heavy and medium-duty truck demand to be slightly better than 2025, particularly in the second half of the year, while power generation, industrial, and aftermarket businesses are expected to remain strong. Analysts estimate next year's revenue growth at 9.1%.

Valuation and Returns

With a P/E Ratio of 26.28 and an EV/EBITDA of 15.63, Cummins' valuation appears to be reasonable, considering its strong financial performance and growth prospects. The company's ROE of 24.13% and ROIC of 12.1% indicate a high level of profitability. Additionally, Cummins prioritizes returning cash to shareholders, with a dividend yield of 1.41% and a commitment to delivering at least 50% of operating cash flow to shareholders in the form of share repurchases and dividends.

Tariffs and Regulatory Impact

Cummins' management team addressed the impact of tariffs on their business, stating that the net drag for 2026 is expected to be 50 basis points. They noted that the company has done a good job mitigating the impact of tariffs through actions such as pricing and cost management. Regarding EPA 2027 regulations, the company believes it is well-positioned with its engine platforms and new product launches, expecting additional content and pricing to drive growth.

3. NewsRoom

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Cummins Inc. (NYSE:CMI) Receives Average Rating of “Moderate Buy” from Brokerages

Mar -10

Source: defenseworld.net

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Blair William & Co. IL Has $20.31 Million Stock Holdings in Cummins Inc. $CMI

Mar -09

Source: defenseworld.net

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Cummins' Fastest-Growing Business Isn't Trucks. It's Data Center Power.

Mar -07

Source: fool.com

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The Rosen Law Firm, P.A. Continues to Remind Investors of the Proposed Class Action Settlement on Behalf of Purchasers of Cummins Inc. Publicly-Traded Common Stock - CMI

Mar -05

Source: globenewswire.com

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Elo Mutual Pension Insurance Co Has $5.75 Million Position in Cummins Inc. $CMI

Mar -03

Source: defenseworld.net

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Banco Santander S.A. Buys 965 Shares of Cummins Inc. $CMI

Feb -28

Source: defenseworld.net

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Cummins (NYSE:CMI) VP Earl Newsome Sells 1,300 Shares of Stock

Feb -24

Source: defenseworld.net

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Market Today: Blue Owl payout, GDP miss, oil and EV moves

Feb -20

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.94%)

6. Segments

Engine

Expected Growth: 2.5%

The engine segment growth of 2.5% is driven by increasing demand for clean energy solutions, Cummins' innovative products, and strategic acquisitions. The company's strong position in the commercial vehicle market, expanding presence in emerging markets, and growing adoption of electric and hybrid vehicles contribute to its growth momentum.

Components

Expected Growth: 3.2%

Cummins Inc.'s growth of 3.2 is driven by increasing demand for emission-reducing technologies, expansion into new markets, and investments in electrification and digitalization. Strong performance in the Asia-Pacific region and growth in Power Generation and Heavy-Duty segments also contribute to the company's growth.

Distribution

Expected Growth: 3.5%

Cummins' distribution growth of 3.5% is driven by increased demand for diesel engines, expansion into emerging markets, and strategic partnerships. The company's diversified product portfolio and strong presence in the North American market also contribute to its growth. Additionally, Cummins' focus on innovation and sustainability supports its long-term growth prospects.

Power Systems

Expected Growth: 4.0%

The Power Systems segment growth from Cummins Inc. is driven by increasing demand for reliable and efficient power generation solutions, expansion into emerging markets, and a strong product portfolio. Additionally, the company's investments in technology and innovation, such as electrification and digitalization, are expected to fuel growth. Cummins' strategic acquisitions and partnerships also contribute to the segment's 4.0% growth.

Accelera

Expected Growth: 5.0%

Accelera's growth is driven by increasing demand for clean energy solutions, government regulations supporting alternative fuels, and Cummins' strategic expansion into new markets. The 5.0 growth rate reflects the segment's strong position in the hydrogen and fuel cell market, with investments in technology and partnerships driving innovation and adoption.

Intersegment Eliminations

Expected Growth: 0.0%

Intersegment eliminations from Cummins Inc. show 0.0% growth, indicating no change in inter-segment transactions or pricing. This stability suggests that the company's business segments are maintaining consistent relationships, with no significant shifts in product flows or pricing strategies between segments.

7. Detailed Products

Engines

Cummins offers a wide range of diesel and natural gas engines for various applications, including on-highway and off-highway use. These engines are designed to provide high performance, reliability, and fuel efficiency.

Generator Sets

Cummins generator sets are designed to provide reliable and efficient power generation for various applications, including emergency backup power, prime power, and peak shaving.

Power Systems

Cummins power systems include a range of products such as uninterruptible power supplies (UPS), switchgear, and controls. These systems are designed to provide reliable and efficient power distribution and control.

Filtration Products

Cummins filtration products include a range of air, fuel, and lube filtration systems designed to improve engine performance and reduce emissions.

Emissions Solutions

Cummins emissions solutions include a range of products and services designed to help customers meet emissions regulations, including exhaust gas recirculation (EGR) systems, selective catalytic reduction (SCR) systems, and diesel particulate filters (DPFs).

Services

Cummins offers a range of services, including maintenance, repair, and overhaul (MRO) services, as well as training and technical support.

8. Cummins Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Cummins Inc. operates in the engine and generator industry, where substitutes such as electric vehicles and alternative energy sources are emerging. However, the demand for internal combustion engines remains strong, particularly in developing markets and for specific applications like heavy-duty trucks and construction equipment. The threat of substitutes is moderate as alternative technologies are still developing and face infrastructure and cost challenges.

Bargaining Power Of Customers

Cummins Inc. has a diversified customer base across various industries, including trucking, construction, and power generation. While some large customers may have negotiating power, the company's broad product portfolio and strong brand reputation limit the bargaining power of individual customers. Additionally, switching costs for customers are high due to the complex nature of Cummins' products.

Bargaining Power Of Suppliers

Cummins Inc. relies on a network of suppliers for components and raw materials. While some suppliers may have significant negotiating power, particularly those providing specialized components, Cummins' scale and purchasing volume allow it to maintain a relatively balanced relationship with suppliers. The company also has a strategy to develop and source components internally, which helps to mitigate supplier bargaining power.

Threat Of New Entrants

The engine and generator industry has high barriers to entry, including significant investment requirements for research and development, manufacturing capacity, and regulatory compliance. New entrants would also face challenges in establishing a brand reputation and securing distribution networks. As a result, the threat of new entrants is relatively low.

Intensity Of Rivalry

The engine and generator industry is highly competitive, with several major players, including Caterpillar, Deere & Company, and Volvo. Competition is driven by factors such as product performance, pricing, and innovation. The high level of competition results in significant marketing and research and development expenses for industry participants.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.52%
Debt Cost 5.87%
Equity Weight 57.48%
Equity Cost 9.26%
WACC 7.82%
Leverage 73.98%

11. Quality Control: Cummins Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Cummins

A-Score: 5.7/10

Value: 2.6

Growth: 5.6

Quality: 5.8

Yield: 4.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

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AMETEK

A-Score: 5.3/10

Value: 1.8

Growth: 5.8

Quality: 7.7

Yield: 1.0

Momentum: 6.0

Volatility: 9.3

1-Year Total Return ->

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Emerson Electric

A-Score: 5.1/10

Value: 2.2

Growth: 4.1

Quality: 6.2

Yield: 4.0

Momentum: 6.0

Volatility: 8.3

1-Year Total Return ->

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Dover

A-Score: 5.1/10

Value: 3.2

Growth: 4.9

Quality: 7.2

Yield: 2.0

Momentum: 4.5

Volatility: 8.7

1-Year Total Return ->

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Otis

A-Score: 5.1/10

Value: 4.4

Growth: 4.4

Quality: 5.5

Yield: 3.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

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Ingersoll Rand

A-Score: 4.2/10

Value: 2.1

Growth: 7.4

Quality: 6.0

Yield: 0.0

Momentum: 2.5

Volatility: 7.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

555.08$

Current Price

555.08$

Potential

-0.00%

Expected Cash-Flows