Now trading at a price of $222.22, Cummins has moved 2.0% so far today.
Cummins returned losses of -6.0% last year, with its stock price reaching a high of $265.28 and a low of $203.18. Over the same period, the stock underperformed the S&P 500 index by -22.0%. As of April 2023, the company's 50-day average price was $228.04. Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. Based in Columbus, IN, the large-cap Industrials company has 73,600 full time employees. Cummins has offered a 2.9% dividend yield over the last 12 months.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $23,771 | $23,571 | $19,811 | $24,021 | $28,074 | $32,194 |
| Gross Margins | 24% | 25% | 25% | 24% | 24% | 24% |
| Operating Margins | 12.0% | 12.0% | 12.0% | 11.0% | 10.0% | 11.0% |
| Net Margins | 9.0% | 10.0% | 9.0% | 9.0% | 8.0% | 8.0% |
| Net Income (MM) | $2,187 | $2,268 | $1,811 | $2,164 | $2,183 | $2,596 |
| Net Interest Expense (MM) | $114 | $243 | $169 | $156 | $199 | $334 |
| Depreciation & Amort. (MM) | $611 | $672 | $673 | $662 | $784 | $959 |
| Earnings Per Share | $13.15 | $14.48 | $12.01 | $14.61 | $15.12 | $17.86 |
| Diluted Shares (MM) | 163 | 156 | 149 | 146 | 142 | 142 |
| Free Cash Flow (MM) | $1,669 | $2,481 | $2,194 | $1,522 | $1,046 | $1,098 |
| Capital Expenditures (MM) | $709 | $700 | $528 | $734 | $916 | $1,079 |
| Net Current Assets (MM) | -$985 | -$1,885 | -$1,738 | -$2,000 | -$5,623 | -$4,969 |
| Long Term Debt (MM) | $1,597 | $1,576 | $3,610 | $3,579 | $4,498 | $5,089 |
Cummins has growing revenues and increasing reinvestment in the business, healthy debt levels, and positive EPS growth. However, the firm has slimmer gross margins than its peers. Finally, we note that Cummins has average net margins with a stable trend and irregular cash flows.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Cummins has a trailing twelve month P/E ratio of 11.6, compared to an average of 20.49 for the Industrials sector. Based on its EPS guidance of $19.52, the company has a forward P/E ratio of 11.7. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 5.2%. On this basis, the company's PEG ratio is 2.22, which suggests that it is overpriced. In contrast, the market is likely undervaluing Cummins in terms of its equity because its P/B ratio is 2.95 while the sector average is 3.78. The company's shares are currently trading 29.6% above their Graham number.
Cummins Has an Average Rating of Buy:
The 15 analysts following Cummins have set target prices ranging from $216.0 to $303.9 per share, for an average of $257.88 with a buy rating. As of April 2023, the company is trading -11.6% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Cummins has a very low short interest because 1.3% of the company's shares are sold short. Institutions own 87.6% of the company's shares, and the insider ownership rate stands at 0.42%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 11% stake in the company is worth $3,490,204,672.
