Cummins
CMI
$634.82
-1.47%
Cummins Inc. is a global leader in the design and manufacture of diesel and natural gas engines, powertrain components, and power generation equipment, serving heavy- and medium-duty commercial trucks, off-highway equipment, and industrial applications. The company differentiates itself through its extensive distribution network of 650 distributors and over 19,000 dealer locations across 190 countries, and its unique business model that competes with many of its own OEM customers. Currently, the investor narrative centers on Cummins' strategic pivot toward electrification and alternative power solutions, including its Accelera segment, while navigating cyclical demand in its traditional engine business. Recent attention has also been drawn to the broader data center power demand theme, which could present growth opportunities for its power systems segment.…
CMI
Cummins
$634.82
Related headlines
CMI 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Cummins's 12-month outlook, with a consensus price target around $757.52 and implied upside of +19.3% versus the current price.
Average Target
$757.52
0 analysts
Implied Upside
+19.3%
vs. current price
Analyst Count
—
covering this stock
Price Range
$530 - $894
Analyst target range
The target price range spans from a low of $520 to a high of $901, representing a wide spread of $381, which indicates significant uncertainty about Cummins' future performance. The high target of $901 implies a 39.9% upside from the current price, likely assuming strong growth in the Accelera segment and robust demand for power systems in data centers. The low target of $520 suggests a 19.3% downside, possibly pricing in a cyclical downturn in the engine business or margin compression. The wide range reflects the divergent views on the pace of the energy transition and the cyclicality of the core markets. Given the recent upgrades from UBS and the consistent 'Buy' ratings, the overall sentiment remains positive, but the spread highlights the risk.
Bulls vs Bears: CMI Investment Factors
Cummins presents a balanced investment case with strong momentum and a forward valuation that appears reasonable, but faces challenges from decelerating growth and cyclical risks. The bull case is supported by a diversified portfolio, solid profitability, and analyst optimism, while the bear case highlights valuation concerns and the slow progress of the electrification strategy. Currently, the evidence slightly favors the bull side, given the strong stock performance and forward earnings expectations. The most critical tension is whether the company can deliver the expected earnings growth to justify its forward PE, especially as revenue growth slows. If earnings growth disappoints, the stock could face significant de-rating.
Bullish
- Strong 1-Year Stock Performance: CMI has delivered a 68.7% return over the past year, significantly outperforming the S&P 500's 21.5% gain. This demonstrates strong investor confidence and momentum, supported by a robust uptrend in the stock price.
- Attractive Forward Valuation: The forward PE of 18.63x is notably lower than the trailing PE of 24.76x, implying expected earnings growth of ~33%. This suggests the market is pricing in substantial profitability improvements, making the stock reasonably valued on a forward basis.
- Diversified Revenue Streams: Revenue is well-diversified across segments: Distribution ($3.116B), Engine ($2.672B), Components ($2.53B), and Power Systems ($1.956B). This reduces reliance on any single market and provides stability across different economic cycles.
- Analyst Consensus is Buy: With 19 analysts covering the stock, the consensus recommendation is 'Buy' with an average target price of $754.86, implying a 17.2% upside from the current price of $643.98. This reflects positive sentiment and expectations of continued growth.
Bearish
- Decelerating Revenue Growth: Revenue growth has slowed from 5.7% YoY in Q2 2025 to 2.7% in Q1 2026. This deceleration could signal maturing markets or increased competition, potentially limiting future earnings growth.
- High Valuation Relative to History: The trailing PE of 24.76x is elevated compared to historical averages for the industrial sector. If earnings growth fails to materialize, the stock could face multiple compression, leading to downside risk.
- Cyclicality of Core Markets: Cummins' engine business is highly cyclical, tied to the health of the commercial trucking and off-highway equipment markets. A downturn in these sectors could significantly impact revenue and profitability.
- Small Accelera Segment: The Accelera segment, focused on electrification, generated only $101 million in revenue, a tiny fraction of total revenue. This indicates that the transition to alternative power is still nascent and may not contribute meaningfully to earnings in the near term.
CMI Technical Analysis
Cummins' stock has been in a strong uptrend over the past year, with a 1-year price change of +68.7%, significantly outperforming the S&P 500's +21.5% gain. The current price of $643.98 sits at 87.3% of its 52-week range (between $379.41 low and $737.76 high), indicating the stock is trading near its highs, which suggests strong momentum but also potential overextension. The stock has pulled back from its 52-week high of $737.76, but remains well above its 52-week low, reflecting a healthy correction within a broader uptrend.
Beta
1.25
1.25x market volatility
Max Drawdown
-16.7%
Largest decline past year
52-Week Range
$386-$738
Price range past year
Annual Return
+64.0%
Cumulative gain past year
| Period | CMI Return | S&P 500 |
|---|---|---|
| 1m | -6.1% | +2.4% |
| 3m | -9.9% | +4.7% |
| 6m | +6.0% | +11.7% |
| 1y | +64.0% | +21.3% |
| ytd | +21.6% | +13.4% |
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CMI Fundamental Analysis
Cummins' revenue has shown steady growth, with the most recent quarter (Q1 2026) reporting revenue of $8.398 billion, a 2.7% year-over-year increase. This growth is modest compared to the prior year's quarters, where revenue grew from $8.174 billion in Q1 2025 to $8.643 billion in Q2 2025, indicating a deceleration in the growth rate. The company's revenue segments show a diversified mix, with Distribution leading at $3.116 billion, followed by Engine at $2.672 billion, Components at $2.53 billion, and Power Systems at $1.956 billion, while the Accelera segment remains small at $101 million, highlighting the early stage of its electrification push.
Quarterly Revenue
$8.4B
2026-03
Revenue YoY Growth
+2.7%
YoY Comparison
Gross Margin
26.7%
Latest Quarter
Free Cash Flow
$2.7B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CMI Overvalued?
Given Cummins' positive net income, the PE ratio is the most appropriate valuation metric. The trailing PE is 24.76x, while the forward PE is 18.63x, implying that the market expects earnings growth of approximately 33% over the next year. This gap suggests that investors are pricing in a significant improvement in profitability, likely driven by cost efficiencies and growth in higher-margin segments. The forward PE of 18.63x is below the trailing multiple, indicating that the stock is not overly expensive on a forward basis if the company meets earnings expectations.
PE
24.8x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 5x~27x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.0x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include a debt-to-equity ratio of 0.66, which is manageable but indicates moderate leverage. The company's free cash flow of $2.671 billion provides a cushion, but any significant downturn could strain liquidity. Revenue concentration in cyclical markets like commercial trucks exposes earnings to economic cycles, as seen in the deceleration from 5.7% to 2.7% growth. Additionally, the small Accelera segment means that the company's future growth depends heavily on traditional engine sales, which may face regulatory and environmental pressures.