CUMMINS INC (CMI) Stock Fundamental Analysis
NYSE:CMI - New York Stock Exchange, Inc. - US2310211063 - Common Stock - Currency: USD
CMI gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 128 industry peers in the Machinery industry. While CMI belongs to the best of the industry regarding profitability, there are concerns on its financial health. CMI is valued correctly, but it does not seem to be growing. Finally CMI also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
CMI had positive earnings in the past year.
CMI had a positive operating cash flow in the past year.
Each year in the past 5 years CMI has been profitable.
CMI had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
CMI has a Return On Assets of 8.54%. This is in the better half of the industry: CMI outperforms 75.78% of its industry peers.
CMI has a Return On Equity of 25.42%. This is amongst the best in the industry. CMI outperforms 92.19% of its industry peers.
The Return On Invested Capital of CMI (11.32%) is better than 75.78% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for CMI is in line with the industry average of 10.31%.
The last Return On Invested Capital (11.32%) for CMI is above the 3 year average (10.13%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.54% | ||
| ROE | 25.42% | ||
| ROIC | 11.32% |
ROA(3y)7.3%
ROA(5y)7.76%
ROE(3y)23.56%
ROE(5y)23.61%
ROIC(3y)10.13%
ROIC(5y)9.3%
1.3 Margins
CMI's Profit Margin of 8.20% is fine compared to the rest of the industry. CMI outperforms 65.63% of its industry peers.
In the last couple of years the Profit Margin of CMI has grown nicely.
CMI has a Operating Margin (11.42%) which is in line with its industry peers.
In the last couple of years the Operating Margin of CMI has remained more or less at the same level.
CMI has a worse Gross Margin (25.58%) than 60.94% of its industry peers.
CMI's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 11.42% | ||
| PM (TTM) | 8.2% | ||
| GM | 25.58% |
OM growth 3Y5.37%
OM growth 5Y0.23%
PM growth 3Y9.26%
PM growth 5Y3.83%
GM growth 3Y1.89%
GM growth 5Y-0.23%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so CMI is still creating some value.
CMI has less shares outstanding than it did 1 year ago.
CMI has less shares outstanding than it did 5 years ago.
CMI has a worse debt/assets ratio than last year.
2.2 Solvency
CMI has an Altman-Z score of 3.77. This indicates that CMI is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.77, CMI is in the better half of the industry, outperforming 61.72% of the companies in the same industry.
The Debt to FCF ratio of CMI is 1069.71, which is on the high side as it means it would take CMI, 1069.71 years of fcf income to pay off all of its debts.
CMI has a Debt to FCF ratio of 1069.71. This is in the lower half of the industry: CMI underperforms 71.09% of its industry peers.
A Debt/Equity ratio of 0.62 indicates that CMI is somewhat dependend on debt financing.
CMI's Debt to Equity ratio of 0.62 is on the low side compared to the rest of the industry. CMI is outperformed by 62.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 1069.71 | ||
| Altman-Z | 3.77 |
ROIC/WACC1.12
WACC10.09%
2.3 Liquidity
CMI has a Current Ratio of 1.34. This is a normal value and indicates that CMI is financially healthy and should not expect problems in meeting its short term obligations.
CMI's Current ratio of 1.34 is on the low side compared to the rest of the industry. CMI is outperformed by 79.69% of its industry peers.
A Quick Ratio of 0.81 indicates that CMI may have some problems paying its short term obligations.
The Quick ratio of CMI (0.81) is worse than 74.22% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.34 | ||
| Quick Ratio | 0.81 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 18.76% over the past year.
Measured over the past 5 years, CMI shows a small growth in Earnings Per Share. The EPS has been growing by 7.79% on average per year.
Looking at the last year, CMI shows a decrease in Revenue. The Revenue has decreased by -0.42% in the last year.
Measured over the past years, CMI shows a small growth in Revenue. The Revenue has been growing by 7.67% on average per year.
EPS 1Y (TTM)18.76%
EPS 3Y13.63%
EPS 5Y7.79%
EPS Q2Q%16.86%
Revenue 1Y (TTM)-0.42%
Revenue growth 3Y12.39%
Revenue growth 5Y7.67%
Sales Q2Q%-2.73%
3.2 Future
The Earnings Per Share is expected to grow by 3.09% on average over the next years.
The Revenue is expected to grow by 5.96% on average over the next years.
EPS Next Y-1.35%
EPS Next 2Y5.22%
EPS Next 3Y7.4%
EPS Next 5Y3.09%
Revenue Next Year-2.23%
Revenue Next 2Y1.7%
Revenue Next 3Y2.42%
Revenue Next 5Y5.96%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 14.92, the valuation of CMI can be described as correct.
CMI's Price/Earnings ratio is rather cheap when compared to the industry. CMI is cheaper than 81.25% of the companies in the same industry.
CMI's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 26.60.
A Price/Forward Earnings ratio of 14.02 indicates a correct valuation of CMI.
Based on the Price/Forward Earnings ratio, CMI is valued a bit cheaper than 75.00% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of CMI to the average of the S&P500 Index (22.43), we can say CMI is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.92 | ||
| Fwd PE | 14.02 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CMI indicates a somewhat cheap valuation: CMI is cheaper than 75.78% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, CMI is valued a bit more expensive than 71.09% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6523.95 | ||
| EV/EBITDA | 9.79 |
4.3 Compensation for Growth
CMI has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.92
EPS Next 2Y5.22%
EPS Next 3Y7.4%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.19%, CMI has a reasonable but not impressive dividend return.
CMI's Dividend Yield is rather good when compared to the industry average which is at 1.83. CMI pays more dividend than 87.50% of the companies in the same industry.
CMI's Dividend Yield is comparable with the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.19% |
5.2 History
On average, the dividend of CMI grows each year by 7.08%, which is quite nice.
CMI has paid a dividend for at least 10 years, which is a reliable track record.
CMI has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)7.08%
Div Incr Years19
Div Non Decr Years20
5.3 Sustainability
35.33% of the earnings are spent on dividend by CMI. This is a low number and sustainable payout ratio.
CMI's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP35.33%
EPS Next 2Y5.22%
EPS Next 3Y7.4%
331.55
-5.1 (-1.51%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners86.78%
Inst Owner Change0.94%
Ins Owners0.28%
Ins Owner Change9.11%
Market Cap45.67B
Analysts70.71
Price Target358.12 (8.01%)
Short Float %1.76%
Short Ratio2.43
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.19% |
Yearly Dividend6.94
Dividend Growth(5Y)7.08%
DP35.33%
Div Incr Years19
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)14.51%
Min EPS beat(2)8.66%
Max EPS beat(2)20.37%
EPS beat(4)4
Avg EPS beat(4)14.55%
Min EPS beat(4)8.34%
Max EPS beat(4)20.82%
EPS beat(8)4
Avg EPS beat(8)4.48%
EPS beat(12)6
Avg EPS beat(12)1.59%
EPS beat(16)8
Avg EPS beat(16)0.69%
Revenue beat(2)1
Avg Revenue beat(2)1.21%
Min Revenue beat(2)-1.21%
Max Revenue beat(2)3.63%
Revenue beat(4)3
Avg Revenue beat(4)1.94%
Min Revenue beat(4)-1.21%
Max Revenue beat(4)4.38%
Revenue beat(8)6
Avg Revenue beat(8)1.78%
Revenue beat(12)10
Avg Revenue beat(12)2.63%
Revenue beat(16)13
Avg Revenue beat(16)2.37%
PT rev (1m)-9.74%
PT rev (3m)-10.18%
EPS NQ rev (1m)-4.28%
EPS NQ rev (3m)-7.59%
EPS NY rev (1m)-1.66%
EPS NY rev (3m)-7.36%
Revenue NQ rev (1m)-2.72%
Revenue NQ rev (3m)-3.78%
Revenue NY rev (1m)-3.55%
Revenue NY rev (3m)-4.8%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.92 | ||
| Fwd PE | 14.02 | ||
| P/S | 1.35 | ||
| P/FCF | 6523.95 | ||
| P/OCF | 37.8 | ||
| P/B | 4.18 | ||
| P/tB | 7.45 | ||
| EV/EBITDA | 9.79 |
EPS(TTM)22.22
EY6.7%
EPS(NY)23.65
Fwd EY7.13%
FCF(TTM)0.05
FCFY0.02%
OCF(TTM)8.77
OCFY2.65%
SpS245.92
BVpS79.31
TBVpS44.48
PEG (NY)N/A
PEG (5Y)1.92
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.54% | ||
| ROE | 25.42% | ||
| ROCE | 18.45% | ||
| ROIC | 11.32% | ||
| ROICexc | 12.5% | ||
| ROICexgc | 16.24% | ||
| OM | 11.42% | ||
| PM (TTM) | 8.2% | ||
| GM | 25.58% | ||
| FCFM | 0.02% |
ROA(3y)7.3%
ROA(5y)7.76%
ROE(3y)23.56%
ROE(5y)23.61%
ROIC(3y)10.13%
ROIC(5y)9.3%
ROICexc(3y)11.48%
ROICexc(5y)10.95%
ROICexgc(3y)15.52%
ROICexgc(5y)14.18%
ROCE(3y)16.61%
ROCE(5y)14.89%
ROICexcg growth 3Y9.39%
ROICexcg growth 5Y0.52%
ROICexc growth 3Y5.66%
ROICexc growth 5Y-1.01%
OM growth 3Y5.37%
OM growth 5Y0.23%
PM growth 3Y9.26%
PM growth 5Y3.83%
GM growth 3Y1.89%
GM growth 5Y-0.23%
F-Score6
Asset Turnover1.04
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 1069.71 | ||
| Debt/EBITDA | 1.38 | ||
| Cap/Depr | 112.35% | ||
| Cap/Sales | 3.55% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 24.47% | ||
| Profit Quality | 0.25% | ||
| Current Ratio | 1.34 | ||
| Quick Ratio | 0.81 | ||
| Altman-Z | 3.77 |
F-Score6
WACC10.09%
ROIC/WACC1.12
Cap/Depr(3y)116.24%
Cap/Depr(5y)110.58%
Cap/Sales(3y)3.46%
Cap/Sales(5y)3.31%
Profit Quality(3y)143.42%
Profit Quality(5y)123.85%
High Growth Momentum
Growth
EPS 1Y (TTM)18.76%
EPS 3Y13.63%
EPS 5Y7.79%
EPS Q2Q%16.86%
EPS Next Y-1.35%
EPS Next 2Y5.22%
EPS Next 3Y7.4%
EPS Next 5Y3.09%
Revenue 1Y (TTM)-0.42%
Revenue growth 3Y12.39%
Revenue growth 5Y7.67%
Sales Q2Q%-2.73%
Revenue Next Year-2.23%
Revenue Next 2Y1.7%
Revenue Next 3Y2.42%
Revenue Next 5Y5.96%
EBIT growth 1Y20.28%
EBIT growth 3Y18.42%
EBIT growth 5Y7.91%
EBIT Next Year44.83%
EBIT Next 3Y16.04%
EBIT Next 5Y7.38%
FCF growth 1Y-99.46%
FCF growth 3Y-42.53%
FCF growth 5Y-35.01%
OCF growth 1Y-47.32%
OCF growth 3Y-12.97%
OCF growth 5Y-14.11%