CMI Investment Analysis Report & Stock Research, Cummins, Inc.

Cummins, Incorporated (CMI)

CMI Stock Report

2-Year Price History

View Larger CMI Chart
NYSE:CMI
$52.35
(2/9 3:04PM)
+4.5%
Open$51.17 Mkt Cap$10.1 Billion
High$52.89 52Wk High$55.41
Low$51 52Wk Low$18.34
Volume1.9 Million Avg Vol 10D3.2 Million

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CMI Revenue

Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, CMI the high and low end of the Price to Sales per share ratios are 0.76x and 0.31x respectively.

Notice that CMI's current Price to Sales per share ratio is 0.94x, which is significantly above its historical average. This places CMI at the upper end of its historical range relative to sales per share and makes it difficult to suggest an attractive price outlook. At current sales per share levels, we would need to see a decline in the Price to Sales ratio of 77% merely to return CMI to its historical average.

CMI Cash Earnings

As the old saying goes, "Cash is King!" We look at reported Cash Earnings, but the main emphasis of our analysis involves stripping out non-cash events such as depreciation from our cash earnings analysis. This helps us view the cash flows more clearly. Nevertheless, an analysis of Cash Earnings (both reported and otherwise) is absolutely pivotal to assessing a company's value, and currently CMI is significantly above its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for CMI to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 12.70 and a 5.01 low over the same period.

Therefore, at the current price of $50.48 and a Price to Cash Earnings ratio of 18.84, CMI is significantly overvalued. This diminishes the attractiveness of CMI until we see either a significant increase in cash earnings or a decline in price. A decline of the Price to Cash Earnings ratio of 112% is needed just to return to the historical cash earnings multiple.

CMI Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In CMI’s case, the estimated annual dividend is $0.70 resulting in a current dividend yield of 1.39%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from CMI against the historic high and low levels over the past 10 years. The highest dividend yield from CMI over this period was 6.14% while the lowest dividend yield was 0.60% It is never a good sign for a company to pay significantly lower dividends, in this case 58.75% below the median yield. Although, dividends are a relatively small portion of our analysis framework, we still see this as a negative factor.

Peer Comparison

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Cummins, Inc. Industry Grouping

(2/8/2010)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not including CMI) 15.48 3.66 » 19.51 1.16 0.27 » 1.35 9.33% 15.44%
*10 year range does not include current year values
Kubota LTD KUB $11.1 Billion $43.82 31.12 2.29 » 35.72 2.86 0.12 » 1.64 5.02% 13.66%
Eaton Corp. ETN $10.3 Billion $61.98 10.97 3.79 » 11.87 0.87 0.25 » 1.16 13.79% 19.66%
Ricoh Company Ltd Spons ADR RICOY $10.2 Billion $70.00 12.85 1.26 » 15.44 0.53 0.10 » 1.25 4.35% 8.14%
Cummins, Inc. CMI $10.1 Billion $50.11 18.84 2.76 » 19.27 0.94 0.14 » 1.11 17.90% 25.02%
Parker-Hannifin Corp. PH $8.8 Billion $54.54 12.70 5.10 » 15.71 0.74 0.43 » 1.20 7.72% 16.32%
ITT Corp. ITT $8.7 Billion $47.51 9.74 5.87 » 18.80 0.81 0.47 » 1.48 15.76% 19.40%
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4:19P, Feb. 02,2010 CMI $51.07 Cummins, Inc.
Closing Bell

Interested in CMI? See What the Pundits Said on Closing Bell

The latest news on Closing Bell in regards to CMI came through on RazorWire recently.

The latest news on CMI has created quite a stir as the stock is trading $4.13 higher in today's session. We noticed recently that in comparison to all other stocks we analyze in the news; CMI has received less coverage from the financial media in business television and blogs. As of this week's report, we have an Overvalued valuation on CMI because the price has gotten too high to be justified by the fundamentals, and since that time the price has only continued to appreciate. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey.

“… Head of CUMMINS engine said, d. R. Horton a big star, home builder outperformed, whirlpool up, 3, 4, 5% increases. Archer daniels, emerson, all better than anticipates. …”

2:44P, Feb. 02,2010 CMI $51.00 Cummins, Inc.
The Razor's Edge

The Razor's Edge: Topics Include Emerging Markets and CMI

There is no doubt that the emerging markets are where the growth is right now. The latest news mention of CMI on The Razor's Edge was in relation to emerging markets.

The Motley Fool CAPS data suggests that investors believe Cummins, Incorporated will beat the market in the foreseeable future. At Ockham, we are not advising buying Cummins, Incorporated at the current price level because according to our methodology it is not supported by the fundamentals. Even since our report, the price has increased 14.0%. Check the news on this stock because there is a catalyst that has allowed this stock to advance 9.69% today. As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, CMI has been less covered in the news compared to the rest of our universe of stocks.

“… However, CUMMINS management warned that the first half of 2010 will be “extremely challenging” and said shipments may fall as much as 80%. …”

1:14P, Jan. 27,2010 CMI $45.51 Cummins, Inc.
Power Lunch

CMI News Mentioned on Power Lunch Recently

Staying informed on the news is invaluable for investors, and RazorWire has captured a recently discussion on CMI from Power Lunch.

As of this week's report, we have an Overvalued valuation on CMI because the price has gotten too high to be justified by the fundamentals. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards CMI and think that it will generally perform in-line with the S&P 500. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Cummins, Incorporated has actually sunk a bit in comparison to the others.

“… CUMMINGS of maryland. You may proceed. > > good seeing you again, mr. Paulson. Mr. Paulson, let me ask you this. Do you realize that a lot of the american people believe ... …”

3:57P, Jan. 08,2010 CMI $53.70 Cummins, Inc.
Closing Bell

Interested in CMI? See What the Pundits Said on Closing Bell

The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Cummins, Incorporated.

At the current price, value investors will want to look elsewhere for a buying opportunity as this stock has heated up and is currently Overvalued. We noticed recently that in comparison to all other stocks we analyze in the news; CMI has received less coverage from the financial media in business television and blogs. The Motley Fool CAPS crowd believes this stock will perform generally in line with the benchmark, or in other words the crowd is neutral. The latest news on CMI has created quite a stir as the stock is trading $2.89 higher in today's session.

“… But CUMMINS, diesel and john deere. General electric's had a great day and fluor, another construction name, doing, very, very well. …”

1:01P, Jan. 08,2010 CMI $53.91 Cummins, Inc.
Power Lunch

Power Lunch: Will CMI Test Its 52-week High?

When a stock reaches a notable high point, investors have to ask themselves: take profits or let it run? See what Power Lunch recommends for Cummins, Incorporated and obviously Ockham has an opinion as well.

Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards CMI and think that it will generally perform in-line with the S&P 500. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Cummins, Incorporated has actually sunk a bit in comparison to the others. As of this week's report, we have an Overvalued valuation on CMI because the price has gotten too high to be justified by the fundamentals.

“… Including engine and power generators, the company CUMMINS, northrop grumman up nearly 50% > > u. P. S. Announcing it's e eliminateing 1800 jobs. Lifting u. P. S. …”

2:22P, Jan. 06,2010 CMI $48.20 Cummins, Inc.
Street Signs

First CMI News on Street Signs in More Than a Month

After a month of relative quiet from CMI, they have appeared back in the news.

As of this week's report, we have an Overvalued valuation on CMI because the price has gotten too high to be justified by the fundamentals. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards CMI and think that it will generally perform in-line with the S&P 500. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Cummins, Incorporated has actually sunk a bit in comparison to the others.

“… Joining us to talk about former politicians profiting in the private sector christine CUMMINGS, politico's editor in charge of enterprise. …”

10:28A, Dec. 01,2009 CMI $45.78 Cummins, Inc.
Squawk On The Street

News on CMI From the Pundits on Squawk On The Street

The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Cummins, Incorporated.

The Motley Fool CAPS data suggests that investors believe Cummins, Incorporated will beat the market in the foreseeable future. At Ockham, we are not advising buying Cummins, Incorporated at the current price level because according to our methodology it is not supported by the fundamentals. As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, CMI has been less covered in the news compared to the rest of our universe of stocks.

“… Check out CUMMINS diesel. This year, 2010 and 2011, they think the demand for the class 8 heavy trucks is going to be up 10% and they like that stock. . …”

2:17P, Nov. 13,2009 CMI $47.05 Cummins, Inc.
Street Signs

The Outlook for Emerging Markets and Cummins, Incorporated Discussed on Street Signs

Cummins, Incorporated and an emerging market growth strategy were discussed recently on CMI.

But that's easier said than two china experts with you today and they have two very different ways of trading right now. Matt CUMMINS joins us and dennis is a partner at meier, enkovic and scott. He's heading to china tomorrow. He's author of "the art of investing in america." you see it also written in chinese. We will explain the significance of that in a couple moments. Matt, so many people hear about invest in china, but those

“… investing in america." you see it also written in chinese. We will explain the significance of that in a couple moments. Matt, so many people hear about invest in china, but those …”

12:01P, Nov. 09,2009 CMI $47.00 Cummins, Inc.
Fox Business

RazorWire has Detected News About CMI on Fox Business

Bill flynn in the pits of chicago and that would be the trading pits. Health care faceoff, of course, republican senator gregg of new hampshire and democratic congressman CUMMINGS of maryland, all of that cup. It's high noon in the financial capitol of the world. Also joining me is our stock editor liz mcdonald and james leventhal, president of leventhal and company. But we begin with the markets and the bulls are back. We've got team coverage like we said, phil is in the chicago

“… e world. Also joining me is our stock editor liz mcdonald and james leventhal, president of leventhal and company. But we begin with the markets and the bulls are back. We've got team coverage like we said, phil is in the chicago …”

6:07P, Oct. 30,2009 CMI $43.51 Cummins, Inc.
Mad Money

Cummins, Incorporated (CMI) Discussed on CNBC's Mad Money

Cummins, Incorporated is in the news. Find out how this impacts CMI trading on Ockham Research.

I remember, because I ripped my suit. Costly trip. Considering the upside surprise CUMMINS delivered, I call it a how about the big dow jones stock like 3m. How about caterpillar? I think terrific stocks to buy when the market settles down and it will settle down. Today, no more than yesterday was the beginning.

“… tle down. Today, no more than yesterday was the beginning. …”

View All Cummins, Inc. Stock News

Key Fundamentals

CMI - Cummins, Incorporated Fundamentals
Price (2/9 3:04PM) $52.35
Volume (2/9 3:04PM) 1.9 Million
Last Close Price $50.11
10 Day Average Volume 3.2 Million
13 Week Price Range $42.61 - $55.41
52 Week Price Range $18.34 - $55.41
LTM Revenue $10.8 Billion
 
Shares Outstanding (12/2009) 201.8 Million
Market Capitalization $10.1 Billion
Shares Held By Institutions 185.1 Million
Institutional Holders 569
% Shares Held By Institutions 91.70%
Earnings Per Share (EPS) $2.16
P/E Ratio 23.20
Book Value Per Share $17.66
 
Gross Margin 21.00%
Annual Dividend 0.70
Dividend Yield 1.40%
Beta 1.97
Fiscal Year Ends December

About Cummins, Inc.

Cummins, Incorporated is considered to operate in the Industrial Goods sector. They specifically operate in the Diversified Machinery business segment contained within the Industrial industry.

The Company designs, manufactures, distributes and services diesel and natural gas engines, electric power generation systems and engine-related component products.