CMI
Cummins Inc.$580.37
Sell
Target $478.92
Report: Mar 08, 2026Industrials • Industrial - Machinery • Cyclical OperatorSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$580.37-17.5%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$478.92
(17% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$617.98
52 Week Low$260.02
Avg. 3 Month Volume953K
Efficiency
LTM Gross Margin25.3%
LTM EBITDA Margin15.7%
LTM EBIT Margin12.4%
LTM Operating Margin10.6%
LTM ROA8.5%
LTM ROE24.1%
LTM ROIC17.3%
LTM ROCE18.4%
Capital Structure
Market Cap (MM)$74.3B
Enterprise Value (MM)$79.0B
Shares Outstanding138.17M
Total Debt (MM)$7.55B
Cash & Equivalents (MM)$2.85B
LTM Net Debt (MM)$4.71B
LTM Net Debt/EBITDA0.9x
Growth
TTM Rev. Growth-1.3%
Last 3-Yr Rev. CAGR6.2%
Last 3-Yr EBITDA CAGR11.9%
Last 3-Yr EPS CAGR10.7%
Valuation
Street Target Price$618.40
LTM EV/Revenue2.3x
LTM EV/Gross Profit9.3x
LTM EV/EBIT18.9x
LTM EV/EBITDA15.0x
LTM P/E26.1x
LTM EV/FCF33.1x
LTM P/FCF31.2x
LTM P/TB2.5x
LTM P/B6.0x
Dividend Yield1.4%
Payout Ratio37.1%
Executive SummarySituation: Current price is $580.37 versus fair value $478.92 (-17.5% expected return), and valuation confidence is stable. Debate: Bull case depends on EPA 2027 Pre-buy: A significant increase in engine orders ahead of the 2027 emissions regulations could provide a temporary volume boost in H2 2026. Bear case centers on Lower-for-Longer Truck Cycle: If the North American heavy-duty truck production does not recover in 2026, the Engine segment will continue to drag on consolidated margins. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
Data center backup power demand creates a secular super-cycle for the Power Systems segment, which currently boasts a 2-year backlog and record 22.9% margins. The Atmus Filtration spin-off successfully reduced share count by 5.6M, sharpening the focus on high-growth segments.
Bear Case
The core Engine segment is in a severe trough with volumes down 38%, and the $1.675B emissions settlement has constrained the capital available for the expensive Accelera transition. Incremental ROIC is deeply negative at -33.4%, indicating that new investments are destroying value.
Key Catalysts
Mid-Term (6-18 months)Impact: High
EPA 2027 Pre-buy: A significant increase in engine orders ahead of the 2027 emissions regulations could provide a temporary volume boost in...
Near-Term (0-6 months)Impact: Moderate
Accelera Strategic Review Conclusion: A full exit or restructuring of the electrolyzer business could stop the recurring $200M+ annual impai...
Long-Term (18+ months)Impact: Moderate
Cummins is at a critical juncture where the market's enthusiasm for its data center exposure has pushed the stock to a 28.2x P/E, creating a...
Primary Risks
Concern: High
Lower-for-Longer Truck Cycle: If the North American heavy-duty truck production does not recover in 2026, the Engine segment will continue t...
Concern: Medium
Tariff and Trade Exposure: New tariffs could create a net EBITDA drag of 50 basis points or more, which management noted as a primary headwi...
Concern: Medium
Stewardship is adequate for a mature industrial, but the lack of insider buying (0.42% ownership) and recent net selling by executives-inclu...
Recent Activity
2026-02-06Analyst Target
+6.86%Firm: Bernstein Price Target: $600.00 Price When Posted: $556.60 Implied Upside: +7.8%
2026-02-05SEC Filing (8-K)
-10.73%Cummins reports Q4 2025 revenues of $8.5 billion with $218 million charges related to electrolyzer business strategic review
2025-11-06SEC Filing (8-K)
+5.38%Cummins reported third quarter 2025 results with non-cash charges related to electrolyzer business.
2025-05-10SEC Filing (8-K)
+7.79%Cummins Inc. completed a $3.0 billion public offering of senior notes due 2028, 2031, and 2035.
2024-11-05SEC Filing (8-K)
+8.86%Cummins reported strong third quarter 2024 results with record sales and improved profitability.
Valuation Table
9.8/10Decision Grade
Scenario Range
$319
Bear
$485
Base
$627
Bull
$580