CMI Investors — Here Are the Facts You Need

Cummins logged a -1.9% change during today's afternoon session, and is now trading at a price of $244.33 per share. The S&P 500 index moved -0.8% and the Nasdaq posted a -0.7% change. CMI's trading volume is 219,958 compared to the stock's average volume of 942,754.

Shares of Cummins have a 50-day average price of $244.067 as of January 2022. Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. The large-cap Industrials company has 59,900 full time employees and is based in Columbus, IN. Cummins has returned a 2.1% dividend yield over the last 12 months.

Low Leverage and Stable Revenues:

2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $23,571 $19,811 $24,021
Revenue Growth n/a -15.95% 21.25%
Gross Margins 25.4% 24.7% 23.7%
Gross Margins Growth n/a -2.76% -4.05%
Operating Margins 10.7% 9.3% 9.2%
Operating Margins Growth n/a -13.08% -1.08%
Earnings Per Share $14.48 $12.01 $14.61
EPS Growth n/a -17.06% 21.65%
Free Cash Flow (MM) $2,406 $2,147 $1,470
FCF Growth n/a -10.76% -31.53%
Capital Expenditures (MM) -$775 -$575 -$786
Net Debt / EBITDA 0.37 0.29 0.48

Cummins Is Too Expensive at Current Levels:

Compared to the Industrials sector's average of 21.46, Cummins has a trailing twelve month P/E ratio of 20.3 and, according to its EPS guidance of 17.03, an expected P/E ratio of 14.3. Cummins's PEG ratio is 0.48 based on its 42.0% average growth rate of historical and projected earnings per share. This suggests that company's shares are undervalued.

Cummins's P/B ratio is 4.5 compared to its sector average of 3.7. The company is likely overvalued in terms of its equity. The company's shares are currently trading 101.2% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 1-year average EPS * book value per share) = √(22.5 * 12.01 * 54.599) = $121.47

Cummins Is the Subject of Mixed Market Indicators:

19 analysts are following Cummins and have set target prices ranging from $190 to $303.9 per share. On average, they have given the company a rating of buy. At the current price of $244.33, CMI is trading -0.56% away from its average analyst target price of $245.71 per share, implying an analyst consensus of some upside potential for the stock.

The company has an average amount of shares sold short since 2.4% of the company's shares are tied to short positions. Institutions own 84.3% of Cummins's shares, while the insider ownership rate stands at 0.41%. The biggest shareholder is the Vanguard Group, Inc. with a 9% stake in the company worth approximately $3,226,092,296.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.