CUMMINS INC (CMI) Stock Fundamental Analysis
NYSE:CMI - New York Stock Exchange, Inc. - US2310211063 - Common Stock - Currency: USD
Taking everything into account, CMI scores 5 out of 10 in our fundamental rating. CMI was compared to 128 industry peers in the Machinery industry. CMI has an excellent profitability rating, but there are concerns on its financial health. CMI is not valued too expensively and it also shows a decent growth rate. Finally CMI also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
CMI had positive earnings in the past year.
In the past year CMI had a positive cash flow from operations.
CMI had positive earnings in each of the past 5 years.
CMI had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
CMI has a better Return On Assets (8.54%) than 74.22% of its industry peers.
With an excellent Return On Equity value of 25.42%, CMI belongs to the best of the industry, outperforming 91.41% of the companies in the same industry.
The Return On Invested Capital of CMI (11.32%) is better than 75.00% 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 10.69%.
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
Looking at the Profit Margin, with a value of 8.20%, CMI is in the better half of the industry, outperforming 64.84% of the companies in the same industry.
CMI's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 11.42%, CMI is in line with its industry, outperforming 59.38% of the companies in the same industry.
In the last couple of years the Operating Margin of CMI has remained more or less at the same level.
The Gross Margin of CMI (25.58%) is worse than 63.28% of its industry peers.
In the last couple of years the Gross Margin of CMI has remained more or less at the same level.
| 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.
The number of shares outstanding for CMI has been reduced compared to 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
An Altman-Z score of 3.80 indicates that CMI is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.80, CMI is in the better half of the industry, outperforming 63.28% 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.
With a Debt to FCF ratio value of 1069.71, CMI is not doing good in the industry: 71.88% of the companies in the same industry are doing better.
A Debt/Equity ratio of 0.62 indicates that CMI is somewhat dependend on debt financing.
CMI has a Debt to Equity ratio of 0.62. This is in the lower half of the industry: CMI underperforms 64.06% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 1069.71 | ||
| Altman-Z | 3.8 |
ROIC/WACC1.18
WACC9.62%
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 81.25% of its industry peers.
CMI has a Quick Ratio of 1.34. This is a bad value and indicates that CMI is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.81, CMI is doing worse than 74.22% of the companies in the same industry.
| 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.
The Revenue has decreased by -0.42% in the past year.
CMI shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.67% yearly.
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
Based on estimates for the next years, CMI will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.85% on average per year.
Based on estimates for the next years, CMI will show a small growth in Revenue. The Revenue will grow by 5.61% on average per year.
EPS Next Y-1.66%
EPS Next 2Y5.89%
EPS Next 3Y7.72%
EPS Next 5Y8.85%
Revenue Next Year-2.18%
Revenue Next 2Y1.77%
Revenue Next 3Y2.45%
Revenue Next 5Y5.61%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
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 15.25, the valuation of CMI can be described as correct.
Based on the Price/Earnings ratio, CMI is valued cheaper than 81.25% of the companies in the same industry.
CMI is valuated rather cheaply when we compare the Price/Earnings ratio to 27.30, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 14.15, which indicates a correct valuation of CMI.
Based on the Price/Forward Earnings ratio, CMI is valued a bit cheaper than 75.78% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.76, CMI is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.25 | ||
| Fwd PE | 14.15 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CMI is valued a bit cheaper than 77.34% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of CMI indicates a slightly more expensive valuation: CMI is more expensive than 71.88% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6665.08 | ||
| EV/EBITDA | 9.99 |
4.3 Compensation for Growth
The decent profitability rating of CMI may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.96
EPS Next 2Y5.89%
EPS Next 3Y7.72%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.14%, CMI has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.81, CMI pays a better dividend. On top of this CMI pays more dividend than 86.72% of the companies listed in the same industry.
CMI's Dividend Yield is comparable with the S&P500 average which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.14% |
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 its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
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 more than its dividend. This makes the dividend growth sustainable.
DP35.33%
EPS Next 2Y5.89%
EPS Next 3Y7.72%
338.82
-1.21 (-0.36%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners86.74%
Inst Owner Change0%
Ins Owners0.31%
Ins Owner Change7.55%
Market Cap46.66B
Analysts71.11
Price Target364.95 (7.71%)
Short Float %1.25%
Short Ratio2.19
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.14% |
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)0.97%
PT rev (3m)-8.02%
EPS NQ rev (1m)0.87%
EPS NQ rev (3m)-3.45%
EPS NY rev (1m)-0.31%
EPS NY rev (3m)-6.68%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.72%
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)-3.5%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.25 | ||
| Fwd PE | 14.15 | ||
| P/S | 1.38 | ||
| P/FCF | 6665.08 | ||
| P/OCF | 38.62 | ||
| P/B | 4.27 | ||
| P/tB | 7.62 | ||
| EV/EBITDA | 9.99 |
EPS(TTM)22.22
EY6.56%
EPS(NY)23.95
Fwd EY7.07%
FCF(TTM)0.05
FCFY0.02%
OCF(TTM)8.77
OCFY2.59%
SpS245.99
BVpS79.33
TBVpS44.49
PEG (NY)N/A
PEG (5Y)1.96
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 | 3.8 |
F-Score6
WACC9.62%
ROIC/WACC1.18
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-1.66%
EPS Next 2Y5.89%
EPS Next 3Y7.72%
EPS Next 5Y8.85%
Revenue 1Y (TTM)-0.42%
Revenue growth 3Y12.39%
Revenue growth 5Y7.67%
Sales Q2Q%-2.73%
Revenue Next Year-2.18%
Revenue Next 2Y1.77%
Revenue Next 3Y2.45%
Revenue Next 5Y5.61%
EBIT growth 1Y20.28%
EBIT growth 3Y18.42%
EBIT growth 5Y7.91%
EBIT Next Year37.82%
EBIT Next 3Y17.24%
EBIT Next 5Y12.91%
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%