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Fundamental analysis: Cummins Inc. (CMI)

Awarener score: 6.7

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Very good), the business stability (Modest) and growth (Very poor), and the company's inclination to return cash to the stockholders (Excellent).

Note: All scores range from 1 (worst) to 10 (best). Conclusions are updated daily with closing stock prices and new reported quarterly financial statements.

Revenue score: 3.5

  • Business has been shrinking at a fast pace. It's been similar to peer companies.
  • Cummins Inc. business trend isn't so stable. The higher the stability, the lower the risk. It looks slightly better than rivals.

Margins score: 6.8

  • CMI profit margins -on goods and services sold- are usually meagre. They stand worse than most rival companies.
  • Business profit on sales tends to be very good. It's similar to competitors.
  • Profits on sales made -available to repay debt and purchase properties- are usually good. They remain close to average when compared to peers.
  • Earnings -before income taxes and interests on loans taken- tend to be good in relation to total revenues. They're still slightly better than similar companies.
  • Profits -before income taxes- are usually very good considering total sales, and remain similar to rivals.
  • Total net profit tends to be good when confronted to sales. Company stands similar to comparable firms.

Growth score: 3.6

  • Cummins Inc. profit -on goods and services sold- has been shrinking. It's been close to average when compared to competitors.
  • In recent years, earnings -on operations- have been shrinking, which has been mediocre against comparable firms.
  • Profits -available to repay debt and purchase properties- tended to shrink, which compares below average when measured against peer enterprises.
  • Growth on earnings -before income taxes and interests on loans taken- have been almost stagnant. It turns to be lacking compared to similar stocks.
  • In past years, growth on profits -before income taxes- was almost stagnant. It was mediocre against rivals.
  • In the previous years, growth on total net profit has been average, and encouraging in relation to peer companies.
  • Earnings per share have grown at a good rhythm in past years. It's been in good shape compared to industry peers.

Miscellaneous score: 4.7

  • CMI had to pay substantial income taxes in relation to profits made in the past years. It's been somewhat worse than peers.
  • Research and development expenses consume a very little portion of revenues. It's below average when measured against competitors.
  • Business has seen substantial shrinking, despite research and development efforts. It stands close to average when compared to rival companies.

Profitability score: 9.2

  • Cummins Inc. usually gets excellent returns on the resources it controls. It proves great when measured against peer firms.
  • The company normally gets huge proceeds -on the resources directly invested in the business-. They remain impressive in relation to similar companies.
  • There's usually excellent profitability -in relation to owned resources-. It ranks great when measured against competitors.
  • In the past, got excellent returns -on the tangible resources it controls-. This metric is usually related to the industry in which operates and combines profitability versus reinvestment needs. It's similar to comparable enterprises.

Usage of Funds score: 6.9

  • CMI usually uses a slight portion of genuine funds generated to buy or replace property, plant, or equipment. The need for reinvestments is light. It stands similar to rival firms.
  • The company is usually somewhat investing in new property, plant, and equipment, to improve its operating capabilities, which is more than average in relation to industry peers.
  • In the past twelve months it paid some dividends, considering the current stock price. It came better than most competitors.
  • Dividend payments have been more or less stable in recent years. The company has behaved lacking compared to similar firms.
  • The company usually uses some portion of genuine funds generated to pay dividends. Dividend payments should be safe, unless business prospects take a nosedive. Sustainability looks somewhat worse than comparable companies.
  • The company usually significantly reduces the pool of investors, resulting in fewer mouths feeding on the pie of profits. It remains impressive in relation to peer enterprises.
  • Repurchase effectiveness metric is very complex. Run again in analytical mode if you 're interested in a technical explanation. It stands impressive in relation to rivals.
  • The company uses a large portion of genuine fund generation to reward investors, which can probably be sustained for as long as business doesn't turn sour. It still looks weak when measured against competitors.

Balance Sheet score: 5.2

  • Cummins Inc. intangible assets (like brands and goodwill) represent a modest portion of resources controlled, according to accounting books. There could be some difficulties in liquidating them if the company ever gets in financial distress. It happens to be more than average in relation to peer companies.
  • The company has more short-term resources than short-term obligations. Liquidity concerns shouldn't be an issue. It turns to be in a weak position compared to similar firms.
  • Roughly a tenth of resources controlled were provided for with financial debt. Creditors have minor claims on the company, and financial position is safe. It remains well ranked against rival firms.
  • Controlled resources can be made into cash within reason, which is quite good for liquidity. It looks more than average in relation to rivals.
  • For every dollar of short-term obligations, the company has roughly another of cash and short-term receivables. It's lacking compared to peer firms.
  • For every dollar of short-term obligations, the company has roughly half of cash and equivalents, which is slightly worse than similar enterprises.
  • Usually, sales are on somewhat less than three months credit. It still ranks similar to peers.
  • Normally has approximately five months of sales worth in inventory. It comes up as rather normal in relation to competitors.
  • On average, it takes higher than six months from the purchase to charging customers. It happens to be slightly better than peers.
  • On average pays suppliers approximately three months after the purchase. It ranks encouraging in relation to industry peers.
  • The company pays its suppliers four months or more before charging its customers, so there's significant money invested in working capital. It's in good shape compared to similar companies.
  • Net interest expenses consume a non-significant portion of usual business earnings, and are therefore extremely easily to bear. It stands top-notch against rival firms.
  • Business earnings have usually been very good when measured against loans taken. Cutting back reinvesting in the business, it could take less than two years to repay the obligations with current profitability. It ranks great when measured against comparable enterprises.
  • Revenues are modest in relation to property, plant, and equipment required to operate. This metric is likely dependent on the industry the company operates in. The more property, plant, and equipment used, the more the company must reinvest to fight obsolescence, which usually means less available funds for the shareholders in the long run. It looks lacking compared to similar firms.
  • Resource exploitation is quite good when yearly sales are considered. This metric is normally tied to the industry where the firm belongs. It's still better than most peer companies.

Valuation score: 6.2

  • Cummins Inc. looks expensive in relation to profits and financial position. It happens to be great when measured against competitors.
  • Price-to-Tangible-Book-Value is a fairly complex metric. Run again in analytical mode if you're interested in a technical explanation. It remains a slight improvement compared to peers.
  • In the past twelve months, the company generated some slightly better free funds in relation to the stock price, which stands somewhat better than similar companies.
  • The company usually generates more than enough genuine funds to cover up for its business needs. Surplus cash may be used to repay loans, to eventually buy new businesses, or to reward investors. Considering the financial position and stock price, at the current price the share might be interesting. It's still great when measured against industry firms.
  • In the past twelve months, the company has rewarded investors, considering both dividends and share on the pie of earnings. It came up impressive in relation to peer ventures.
  • The company has neither net debt nor net cash. It may borrow extra money if it wishes so, or start cumulating cash for future uses. It looks somewhat better than similar enterprises.
  • Considering the past twelve months, traditional Price-to-Earnings relation is high. Substantial improvement expectations are already in the stock price, which is somewhat risky. It ranks great when measured against peer companies.
  • Comparing the current stock price with the past twelve-months revenues gives a roughly two to one relationship. This is an important metric to check its evolution through time, and to compare to industry peers. It looks in good shape compared to rival firms.
  • The relation between the stock price and accounting book value is significantly high, which may be good or bad depending on context. Run again in analytic mode if you want to dig deeper. The company remains slightly worse than peer firms.
  • In the past twelve months, the operating business earned some money when compared to the current stock price and financial position. It happens to be great when measured against industry peers.
  • In an alternate metric of bang for the buck, the company has usually shown a very good earnings power ability when measured against the current stock price and financial position. It's still impressive in relation to peer companies.

Total score: 5.8


CMI logos

Company at a glance: Cummins Inc. (CMI)

Sector, industry: Industrials, Specialty Industrial Machinery

Market Cap: 31.63 billions

Revenues TTM: 18.20 billions

Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. It operates through five segments: Engine, Distribution, Components, Power Systems, and New Power. The company offers diesel and natural gas-powered engines under the Cummins and other customer brands for the heavy and medium-duty truck, bus, recreational vehicle, light-duty automotive, construction, mining, marine, rail, oil and gas, defense, and agricultural markets; and offers new parts and services, as well as remanufactured parts and engines. It also provides power generation systems, high-horsepower engines, heavy and medium duty engines, application engineering services, custom-designed assemblies, retail and wholesale aftermarket parts, and in-shop and field-based repair services. In addition, the company offers emission solutions; turbochargers; air and fuel filters, fuel water separators, lube and hydraulic filters, coolants, fuel additives, and other filtration systems; and electronic control modules, sensors, and supporting software, as well as new, replacement, and remanufactured fuel systems. Further, it provides automated transmissions; standby and prime power generators, controls, paralleling systems, and transfer switches, as well as A/C generator/alternator products under the Stamford and AVK brands; and electrified power systems with components and subsystems, including battery, fuel cell, and hydrogen production technologies. Additionally, it offers filtration, aftertreatment, controls systems, air handling systems, automated transmissions, electric power generation systems, and batteries. The company sells its products to original equipment manufacturers, distributors, dealers, and other customers. The company was formerly known as Cummins Engine Company and changed its name to Cummins Inc. in 2001. Cummins Inc. was founded in 1919 and is headquartered in Columbus, Indiana.

Awarener score: 6.7

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Very good), the business stability (Modest) and growth (Very poor), and the company's inclination to return cash to the stockholders (Excellent).