NYSE:CMI
CUMMINS INC
A global power generation leader offering durable diesel and natural gas engines with a strategic pivot toward electrification and alternative fuels.
Key Metrics
Investment Thesis
Bull Case
Cummins offers compelling value with a strong balance sheet featuring $2.85B in ending cash and consistent positive operating cash flow that supports shareholder returns via $1.05B in dividends. The strategic expansion into electrification and hydrogen fuel cells positions the company to capture growth in the decarbonization economy while maintaining high margins on its core engine business.
Bear Case
Investors may worry about margin compression as the company navigates a complex transition away from traditional diesel engines toward unproven alternative power sources. The significant retained earnings deficit of $22.62B and large accumulated other comprehensive loss suggest historical volatility that could resurface if market conditions deteriorate or R&D investments fail to yield commercial products.
About CUMMINS INC
Cummins Inc. is a global leader in power generation solutions, manufacturing engines, generators, and fuel cell systems for commercial, industrial, and marine applications. The company serves diverse markets including mining, agriculture, construction, transportation, and power production, leveraging its extensive R&D investments to drive efficiency and sustainability. Its robust product portfolio includes diesel and natural gas engines alongside emerging electric power generation technologies.
Analysis
Management Discussion
The company reported a net profit of $2.96B in 2025, reflecting strong operational efficiency despite a slight revenue contraction to $33.67B from the prior year. Cash flow from operations reached $3.62B, enabling significant share buybacks and dividends while funding capital expenditures of $1.24B for modernization efforts.
Industry Overview
The global power generation industry is undergoing a rapid transformation driven by climate regulations and the electrification of transportation, forcing legacy engine manufacturers to diversify their portfolios. Competition from electric vehicle suppliers and renewable energy providers is intensifying, requiring Cummins to accelerate innovation in fuel cell and battery technologies to maintain market share.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $28.07B | $34.06B | $34.10B | $33.67B |
| Cost of Revenue | $21.36B | $25.82B | $25.66B | $25.15B |
| Gross Profit | $6.72B | $8.25B | $8.44B | $8.52B |
| Operating Expenses | $3.79B | $6.49B | $4.69B | $4.49B |
| Operating Income | $2.93B | $1.76B | $3.75B | $4.03B |
| R&D | $1.28B | $1.50B | $1.46B | $1.40B |
| G&A | $2.69B | $3.33B | $3.27B | $3.12B |
| Stock-Based Comp | $33.0M | $79.0M | $100.0M | $93.0M |
| D&A | $784.0M | $1.02B | $1.06B | $1.10B |
| Depreciation | $557.0M | $691.0M | $729.0M | $768.0M |
| Amortization | $223.0M | $324.0M | $324.0M | $323.0M |
| Other OpEx | $-175.0M | $1.66B | $-49.0M | $-30.0M |
| Non-Operating Income | $-110.0M | $-135.0M | $1.15B | $-62.0M |
| Interest Expense | $199.0M | $375.0M | $370.0M | $329.0M |
| Pre-Tax Income | $2.82B | $1.63B | $4.90B | $3.96B |
| Income Tax | $636.0M | $786.0M | $835.0M | $1.01B |
| Continuing Ops | $2.18B | $840.0M | $4.07B | $2.96B |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $2.18B | $840.0M | $4.07B | $2.96B |
| Minority Interest | $32.0M | $105.0M | $122.0M | $114.0M |
| Net to Common | $2.15B | $735.0M | $3.95B | $2.84B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $14.45B | $15.20B | $14.75B | $16.93B |
| Cash & Equivalents | $2.10B | — | — | — |
| Marketable Securities | $472.0M | $562.0M | $593.0M | $764.0M |
| Inventory | $5.60B | $5.68B | $5.74B | $5.82B |
| Prepaid Expenses | $1.07B | $1.20B | $1.56B | $1.68B |
| Other Current Assets | $5.20B | $7.76B | $6.85B | $8.66B |
| Long-Term Assets | $15.85B | $16.81B | $16.79B | $17.07B |
| PP&E (Net) | $5.52B | $6.25B | $6.36B | $6.96B |
| Intangibles | $2.69B | $2.52B | $2.35B | $2.17B |
| Goodwill | $2.34B | $2.50B | $2.37B | $2.22B |
| Operating Leases | $492.0M | $501.0M | $532.0M | $537.0M |
| Other LT Assets | $4.80B | $5.04B | $5.18B | $5.18B |
| Total Assets | $30.30B | $32.01B | $31.54B | $33.99B |
| Current Liabilities | $11.42B | $12.90B | $11.23B | $9.61B |
| Accounts Payable | $4.25B | $4.26B | $3.95B | $3.80B |
| Current Debt | $573.0M | $118.0M | $660.0M | $94.0M |
| Current Leases | $132.0M | $138.0M | $130.0M | $138.0M |
| Deferred Revenue | $1.00B | $1.22B | $1.35B | $1.61B |
| Other Current Liab | $4.00B | $3.41B | $3.25B | $2.05B |
| Long-Term Liabilities | $8.65B | $9.20B | $9.00B | $10.97B |
| LT Operating Leases | $368.0M | $374.0M | $409.0M | $424.0M |
| Other LT Liab | $4.87B | $6.36B | $6.26B | $9.14B |
| Total Liabilities | $20.07B | $22.10B | $20.23B | $20.58B |
| Shareholders' Equity | $10.22B | $9.90B | $11.31B | $13.41B |
| Retained Earnings | $18.04B | $17.85B | $20.83B | $22.62B |
| AOCI | $-1.89B | $-2.21B | $-2.44B | $-2.28B |
| Treasury Stock | $9.41B | $9.36B | $10.75B | $10.66B |
| Total L&E | $30.30B | $32.01B | $31.54B | $33.99B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $2.18B | $840.0M | $4.07B | $2.96B |
| Non-Cash Adjustments | $-1.96B | $-191.0M | $-1.24B | $90.0M |
| Working Capital Changes | $1.74B | $3.32B | $-1.35B | $574.0M |
| Cash from Operations | $1.96B | $3.97B | $1.49B | $3.62B |
| Capital Expenditures | $916.0M | $1.21B | $1.21B | $1.24B |
| Cash from Investing | $-4.17B | $-1.64B | $-1.78B | $-1.73B |
| Debt Issuances | $2.10B | $861.0M | $2.72B | $2.33B |
| Share Buybacks | $374.0M | $0 | $0 | — |
| Dividends Paid | $855.0M | $921.0M | $969.0M | $1.05B |
| Cash from Financing | $1.67B | $-2.18B | $-173.0M | $-772.0M |
| FX Effect | $50.0M | $-68.0M | $-40.0M | $56.0M |
| Net Change in Cash | $-491.0M | $78.0M | $-508.0M | $1.17B |
| Beginning Cash | $2.59B | $2.10B | $2.18B | $1.67B |
| Ending Cash | $2.10B | $2.18B | $1.67B | $2.85B |
Frequently Asked Questions
How does CUMMINS INC make money?
Revenue is driven by three primary streams: Engine Products covering industrial, mining, and agricultural applications; Power Generation Systems including generators for commercial and residential use; and Marine Products serving the transportation and recreational boating sectors.
What are the main risks for CMI?
Volatility in raw material costs for steel and aluminum significantly impacts gross margins given the $25.15B cost of revenue structure. Transitioning from diesel to electrification requires massive capital expenditures beyond the current $1.24B annual spend to maintain technological relevance. Regulatory shifts toward carbon neutrality could disrupt legacy engine demand if alternative fuel adoption lags behind policy timelines.
What is CMI's competitive advantage?
Cummins maintains a dominant market position through decades of R&D investment resulting in high-efficiency engines that reduce fuel consumption by up to 20% compared to older models. The company's diversified global footprint provides resilience against regional economic downturns, while its strong brand reputation ensures premium pricing power in critical infrastructure and transportation markets.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.