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Fundamental analysis: Cummins Inc. (CMI)

Awarener score: 7.5

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 (Modest), and the company's inclination to return cash to the stockholders (Superb).

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: 5.0

  • Business growth has been almost stagnant. It's been more than average in relation to peer companies.
  • Cummins Inc. business trend isn't so stable. The higher the stability, the lower the risk. It looks mediocre against rivals.

Margins score: 6.2

  • CMI profit margins -on goods and services sold- are usually very poor. They stand worse than most rival companies.
  • Business profit on sales tends to be good. It's almost average when measured against competitors.
  • Profits on sales made -available to repay debt and purchase properties- are usually sufficient. 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 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: 2.1

  • Cummins Inc. profit growth -on goods and services sold- has been almost stagnant. It's been lacking compared to competitors.
  • In recent years, earnings -on operations- have been shrinking, which has been worse than most comparable firms.
  • Profits -available to repay debt and purchase properties- tended to shrink, which compares substantially worse when measured against peer enterprises.
  • Earnings -before income taxes and interests on loans taken- tended to shrink. It turns to be in a very weak position compared to similar stocks.
  • In past years, profits -before income taxes- tended to shrink. It was worse than most rivals.
  • In the previous years, growth on total net profit has been negative, and substantially worse when measured against peer companies.
  • Earnings per share have been shrinking in the past years. It's been in a very weak position compared to industry peers.

Miscellaneous score: 7.7

  • CMI had to pay sparse income taxes in relation to profits made in the past years. It's been slightly better than peers.
  • Research and development expenses consume a very little portion of revenues. It's almost average when measured against competitors.
  • The company shows good business growth in relation to research and development efforts. It stands a slight improvement compared to rival companies.

Profitability score: 9.5

  • Cummins Inc. usually gets excellent returns on the resources it controls. It proves more than average in relation to peer firms.
  • The company normally gets huge proceeds -on the resources directly invested in the business-. They remain excellent in relation to similar companies.
  • Profitability -in relation to owned resources- is usually paramount. It ranks top tier 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: 7.0

  • CMI usually uses a modest portion of genuine funds generated to buy or replace property, plant, or equipment. The need for reinvestments isn't too high. 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 great when measured against industry peers.
  • In the past twelve months it paid some dividends, considering the current stock price. It came top-notch against competitors.
  • Has increased dividend payments in the past years. Business prospects may have improved. The company has behaved a slight improvement 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 slightly 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 below average when measured against competitors.

Balance Sheet score: 5.3

  • Cummins Inc. intangible assets (like brands and goodwill) represent a portion of resources controlled, according to accounting books. There could be difficulties in liquidating them if the company ever gets in financial distress. It happens to be similar to peer companies.
  • The company has somewhat more short-term resources than short-term obligations. Liquidity concerns might not be that important. It turns to be in a weak position compared to similar firms.
  • Roughly a quarter of resources controlled were provided for with financial debt. Creditors have some claims on the company. It remains slightly worse than rival firms.
  • Controlled resources can be made into cash within reason, which is quite good for liquidity. It looks encouraging in relation to rivals.
  • For every dollar of short-term obligations, the company has almost another of cash and short-term receivables. It's lacking compared to peer firms.
  • For every dollar of short-term obligations, the company has few cents of cash and equivalents, which is somewhat worse than similar enterprises.
  • Usually, sales are on slightly higher than two months credit. It still ranks below average when measured against peers.
  • Normally has approximately three months of sales worth in inventory. It comes up as a slight improvement compared to competitors.
  • On average, it takes higher than five months from the purchase to charging customers. It happens to be somewhat better than peers.
  • On average pays suppliers longer than two months after the purchase. It ranks encouraging in relation to industry peers.
  • The company pays its suppliers roughly three months before charging its customers, so there's sufficient money invested in working capital. It's in good shape compared to similar companies.
  • Net interest expenses consume a slight portion of usual business earnings, and are very easily bearable. It stands well ranked against rival firms.
  • Business earnings have usually been good when measured against loans taken. Cutting back reinvesting in the business, it could take less than three years to repay the obligations with current profitability. It ranks more than average in relation to comparable enterprises.
  • Revenues are quite good 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 close to average when compared to similar firms.
  • Resource exploitation is very 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: 6.7

  • Cummins Inc. looks reasonable in relation to profits and financial position. It happens to be top tier 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 rather normal in relation to peers.
  • In the past twelve months, the company generated some good free funds in relation to the stock price, which stands top-notch against 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 top tier when measured against industry firms.
  • In the past twelve months, the company has significantly rewarded investors, considering both dividends and share on the pie of earnings. It came up impressive in relation to peer ventures.
  • The company has barely more debt than cash. It may borrow extra money if it wishes so, or start cumulating cash for future uses. It looks somewhat worse than similar enterprises.
  • Considering the past twelve months, traditional Price-to-Earnings relation might be more or less reasonable, but hardly cheap. It ranks top tier when measured against peer companies.
  • Comparing the current stock price with the past twelve-months revenues gives a more than one-to-one relationship. This is an important metric to check its evolution through time, and to compare to industry peers. It looks excellent in relation 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 good money when compared to the current stock price and financial position. It happens to be top tier 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: 6.2


CMI logos

Company at a glance: Cummins Inc. (CMI)

Sector, industry: Industrials, Specialty Industrial Machinery

Market Cap: 30.83 billions

Revenues TTM: 32.93 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: 7.5

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 (Modest), and the company's inclination to return cash to the stockholders (Superb).