Investment Thesis
Cummins demonstrates solid financial health with strong profitability metrics (23% ROE, 8.4% net margin) and robust cash generation ($2.4B FCF), supporting its position in the engines and turbines sector. However, revenue contraction (-1.3% YoY) and significant EPS decline (-27.7% YoY) indicate headwinds that warrant monitoring, though the company maintains healthy liquidity and manageable leverage ratios.
CMI Strengths
- Strong return on equity (23%) and return on assets (8.4%) indicating efficient capital deployment
- Solid free cash flow generation ($2.4B) covering capex 2x over with 7.1% FCF margin
- Conservative balance sheet with 0.61x debt-to-equity ratio and 12.2x interest coverage ratio
- Healthy liquidity position with 1.76x current ratio and $2.8B cash on hand
CMI Risks
- Revenue declining year-over-year (-1.3%) suggesting softening market demand or competitive pressures
- Diluted EPS contracted sharply (-27.7% YoY) despite positive net income, indicating share dilution or tax headwinds
- Operating margin compression risk in cyclical engines industry during economic slowdowns
- High insider activity (28 Form 4 filings) warrants monitoring for potential confidence signals or equity compensation dilution
Key Metrics to Watch
- Revenue trend reversal - critical to confirm stabilization or growth resumption
- Operating margin sustainability - monitor for further compression below 12%
- Free cash flow conversion ratio - ensure FCF remains above $2.2B annually
- Debt-to-equity trajectory - watch for leverage increase above 0.70x threshold
CMI Financial Metrics
CMI Profitability Ratios
CMI Balance Sheet & Liquidity
CMI 5-Year Financial Trend
5-Year Trend Summary: CUMMINS INC's revenue has grown significantly by 42% over the 5-year period, indicating strong business expansion. The most recent EPS of $5.15 reflects profitable operations.
CMI Growth Metrics (YoY)
CMI Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $8.3B | $559.0M | $3.86 |
| Q2 2025 | $8.6B | $752.0M | $5.26 |
| Q1 2025 | $8.2B | $850.0M | $5.96 |
| Q3 2024 | $8.4B | $690.0M | $4.59 |
| Q2 2024 | $8.6B | $737.0M | $5.05 |
| Q1 2024 | $8.4B | $806.0M | $5.55 |
| Q3 2023 | $7.3B | $409.0M | $2.82 |
| Q2 2023 | $6.6B | $707.0M | $4.94 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
CMI Capital Allocation
CMI SEC Filings
Access official SEC EDGAR filings for CUMMINS INC (CIK: 0000026172)