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Cummins

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XBRL · SEC EDGAR

2007–2025(19yr)

Revenue

Net Income

Free CF

Metric	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$13.0B	$14.3B	$10.8B	$13.2B	$18.0B	$17.3B	$17.3B	$19.2B	$19.1B	$17.5B	$20.4B	$23.8B	$23.6B	$19.8B	$24.0B	$28.1B	$34.1B	$34.1B	$33.7B	-1.3%
Gross Profit	$2.6B	$2.9B	$2.2B	$3.2B	$4.6B	$4.5B	$4.4B	$4.9B	$4.9B	$4.5B	$5.1B	$5.7B	$6.0B	$4.9B	$5.7B	$6.7B	$8.2B	$8.4B	$8.5B	+0.9%
Gross Margin	19.6%	20.5%	20.1%	24.0%	25.4%	26.0%	25.3%	25.3%	25.9%	25.4%	24.9%	24.1%	25.4%	24.7%	23.7%	23.9%	24.2%	24.7%	25.3%	+0.5pp
Operating Income	$1.2B	$1.3B	$682.0M	$1.6B	$2.7B	$2.3B	$2.1B	$2.4B	$2.1B	$1.9B	$2.4B	$2.8B	$2.7B	$2.3B	$2.7B	$2.9B	$1.8B	$3.8B	$4.0B	+7.3%
Operating Margin	8.9%	8.9%	6.3%	12.1%	14.9%	13.0%	12.1%	12.3%	10.8%	11.0%	11.6%	11.7%	11.5%	11.5%	11.3%	10.4%	5.2%	11.0%	12.0%	+1.0pp
Net Income	$739.0M	$755.0M	$428.0M	$1.0B	$1.9B	$1.7B	$1.6B	$1.7B	$1.5B	$1.5B	$994.0M	$2.2B	$2.3B	$1.8B	$2.2B	$2.2B	$840.0M	$4.1B	$3.0B	-27.3%
Net Margin	5.7%	5.3%	4.0%	7.9%	10.8%	10.0%	9.2%	9.0%	7.7%	8.3%	4.9%	9.2%	9.6%	9.1%	9.0%	7.8%	2.5%	11.9%	8.8%	-3.1pp
Free Cash Flow	$457.0M	$444.0M	$827.0M	$642.0M	—	—	—	$1.5B	$1.3B	$1.4B	$1.8B	$1.7B	$2.5B	$2.2B	$1.5B	$1.0B	$2.8B	$279.0M	$2.4B	+755.2%
FCF Margin	3.5%	3.1%	7.7%	4.9%	—	—	—	7.9%	6.9%	8.0%	8.7%	7.0%	10.5%	11.1%	6.3%	3.7%	8.1%	0.8%	7.1%	+6.3pp
EPS (Diluted)	$3.70	$3.84	$2.16	$5.28	$9.55	$8.67	$7.91	$9.02	$7.84	$8.23	$5.97	$13.15	$14.48	$12.01	$14.61	$15.12	$5.15	$28.37	$20.50	-27.7%

Total Debt$6.8B

Cash & Equiv.$3.6B

Net Debt$3.2B

4 min read

1. THE BIG PICTURE

Cummins is currently a business in transition, using the cash flow from its traditional engine segments to fund "Destination Zero," its long-term shift toward electric and hydrogen power. This transformation is being executed under the shadow of a $2.0 billion regulatory settlement and a structural dependence on Chinese partnerships that provide nearly half of its equity income.

2. WHERE THE RISKS HIT HARDEST

Cummins’s "global footprint and service network" (10-K Item 1) is directly threatened by regulatory and compliance risks. The $2.0 billion charge recorded in late 2023 for emissions non-compliance creates "reputational damage" and "increased scrutiny" from global regulators that could hinder future product certifications (14A Proxy). Furthermore, the "integrated portfolio" (10-K Item 1) is vulnerable to customer vertical integration. Because Cummins relies on a few large OEM customers that historically outsource engine production, any shift by these customers to manufacture their own engines would lead to "significant reductions in sales volumes," undermining the scale Cummins needs to fund its energy transition (10-K Item 1).

3. WHAT THE NUMBERS SAY TOGETHER

While management highlights "robust demand for data center backup power" (8-K), the aggregate data reveals a company under margin pressure. Revenue growth of -1.3% (TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter) lags most peers, and its 26.0% gross margin is the lowest in its peer group (XBRL). This margin profile reflects a hardware-heavy business mix compared to more diversified peers like Emerson (52.8%).

The 31% sales jump in the Accelera segment is a positive signal for the technology pivot, yet it is currently a financial drain, recording a $374 million EBITDAEBITDAEarnings Before Interest, Taxes, Depreciation & Amortization — a rough proxy for operating cash profit, stripping out accounting adjustments loss in the most recent quarter. This loss included $218 million in charges related to the electrolyzer business, a move CEO Jennifer Rumsey attributed to a "weaker outlook for demand" and a "strategic review" of hydrogen adoption (8-K). This suggests the transition to green energy may be slower and more expensive than initially projected, diverging from the more stable growth seen in the Distribution and Power Systems segments.

4. IS IT WORTH IT AT THIS PRICE?

At a 17.9x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Cummins trades at a modest discount to the peer median of 25.7x (Yahoo Finance). This discount is supported by Cummins’s recent -1.3% revenue contraction and a net margin of 9.5%, which is the lowest among its primary peers.

At this multiple, the market is pricing in ~5.1% long-term growth (CAPM analysis). This expectation is consistent with management’s 2026 guidance of 3% to 8% revenue growth (8-K). However, the valuation is sensitive to execution: if long-term growth slows to a GDP-pace of 2.5%, the justified multiple would fall to 12.2x. The current price is only justified if Cummins can successfully stabilize its Engine segment while narrowing the losses in Accelera. With short interest at a low 1.3% of the float, market sentiment remains cautious but not aggressively bearish.

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if equity income from Chinese joint ventures (which totaled $469 million in 2025) declines due to regional economic weakness or changes in joint venture control (10-K Item 1).
Constructive if the Accelera segment achieves a clear path toward EBITDAEBITDAEarnings Before Interest, Taxes, Depreciation & Amortization — a rough proxy for operating cash profit, stripping out accounting adjustments breakeven, proving that "Destination Zero" can eventually generate its own capital.
Cautious if major truck OEMs announce plans to vertically integrate engine production, directly threatening the volumes in the Engine and Components segments.

6. BOTTOM LINE

Structural Advantage: A massive global service network of 13,000 certified dealer locations that creates a high barrier to entry for new power-solution competitors. Bottom Line: Cummins is a value-priced industrial giant whose future depends on navigating a costly regulatory and technological transition without losing its core OEM customer base.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Emissions Compliance and Regulatory Settlements: Cummins recorded a $2.0 billion charge in the fourth quarter of 2023 to resolve regulatory claims regarding emissions certification for pick-up truck engines. Cummins remains subject to stipulated penalties for non-compliance with these settlement agreements and faces ongoing scrutiny from U.S. and non-U.S. regulators.
Reliance on Unconsolidated Joint Ventures: Cummins derives a significant portion of its earnings from investees it does not control, specifically three 50-percent-owned joint ventures in China: Chongqing Cummins Engine Company, Ltd., Dongfeng Cummins Engine Company, Ltd., and Beijing Foton Cummins Engine Co., Ltd. In 2025, Cummins recognized $469 million in equity, royalty, and interest income from investees, with nearly 50 percent of that total coming from these three entities.
Customer Outsourcing and Vertical Integration: Cummins relies on sales to a few large on-highway truck OEM customers that historically outsource engine production. A shift in strategy toward vertical integration by these customers, or financial distress resulting from a change-in-control, could lead to significant reductions in sales volumes.
Global Supply Chain and Trade Volatility: Cummins relies on a global supply chain for raw materials and components. Uncertainty regarding tariffs, trade disruptions, and export controls—particularly concerning China—threatens to increase production costs and restrict Cummins's ability to sell products in certain regions.
Energy Transition and Product Demand: The shift away from fossil fuels and the adoption of electrified powertrains may reduce demand for Cummins’ traditional diesel and natural gas engines. If the energy transition occurs faster or slower than anticipated, Cummins may fail to realize the benefits of its investments in new technologies or face obsolescence of its current product portfolio.

2. Company-Specific Risks

Product Recalls: Cummins is subject to product recalls for performance or safety-related issues, which can lead to reduced revenue and direct recall costs. Cummins previously recorded $59 million in charges for recalls of model years 2013–2018 RAM 2500/3500 trucks and 2016–2019 Titan trucks.
Pension Plan Obligations: Cummins sponsors defined benefit pension plans. Significant declines in financial and stock market conditions could diminish plan asset performance, potentially requiring material contributions and increasing pension costs.
AI Implementation Risks: Cummins is incorporating AI into its operations and products. Deficiencies, inaccuracies, or unintended biases in AI outputs could result in operational inefficiencies, intellectual property infringement, or reputational harm.
Labor Relations: Approximately 20,000 of Cummins’ 67,400 employees are represented by unions under collective bargaining agreements expiring between 2026 and 2030. Work stoppages or labor conflicts could disrupt manufacturing and distribution.

3. Regulatory/Legal Risks

Environmental Legislation: Cummins is subject to evolving laws governing air emissions, carbon content, and waste disposal, including EPA reporting requirements for per- and polyfluoroalkyl substances (PFAS).
Data Privacy and Security: Cummins must comply with global data privacy regulations, such as the EU General Data Protection Regulation (GDPR). Failure to protect sensitive information or maintain IT security could result in legal sanctions and reputational damage.
Product Liability: Cummins faces inherent risks of product liability claims if its products fail to perform to specifications, potentially resulting in property damage, bodily injury, or death.
Tax Audits: Cummins is subject to ongoing tax audits in multiple jurisdictions. Disagreements with tax authorities regarding reporting positions could lead to assessments of additional taxes that differ materially from Cummins's current tax provisions.

4. Financial Impact Map

Emissions Settlement Agreements → Net Income → $2.0 billion charge recorded in Q4 2023. Unconsolidated Joint Ventures → Equity, Royalty, and Interest Income → $469 million recognized in 2025. Product Recalls → Product Warranty Liability → $59 million in charges for specific RAM and Titan truck model years. Interest Rate Fluctuations → Goodwill Assets → Potential for non-cash impairment charges if rates rise. Strategic Acquisitions → Goodwill and Intangible Assets → Potential for non-cash impairment charges if acquired assets underperform.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
10-K	Feb 2026	Dec 2025
8-K	Feb 2026	—
14A	Mar 2025	—