Cummins Inc (CMI, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $264.76, Cummins Inc has witnessed a daily loss of 0.39%, marked against a three-month change of 19.69%. A thorough analysis, underlined by the GF Score, suggests that Cummins Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 9/10
- Growth rank: 9/10
- GF Value rank: 7/10
- Momentum rank: 7/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a particularly high profitability and growth rank, and slightly lower but still strong financial strength and value ranks, GuruFocus assigned Cummins Inc the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Cummins Inc's Business
Cummins Inc, with a market cap of $37.56 billion and sales of $34.07 billion, is the top manufacturer of diesel engines used in commercial trucks, off-highway equipment, and railroad locomotives, in addition to standby and prime power generators. The company also sells powertrain components, which include transmissions, turbochargers, aftertreatment systems, and fuel systems. Competing with its primary customers, heavy-duty truck manufacturers, Cummins Inc maintains its leadership position in the industry despite robust competition and increasing government regulation of carbon emissions.
Financial Strength Breakdown
According to the Financial Strength rating, Cummins Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With a favorable Debt-to-Revenue ratio of 0.21, Cummins Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Cummins Inc's impressive standing among its peers in generating profit. This high rank reflects the company's ability to maintain margins and generate returns on investments, which is a testament to its operational efficiency and market position.
Growth Rank Breakdown
Ranked highly in Growth, Cummins Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 21.5%, which outperforms better than 82.89% of 2,753 companies in the Industrial Products industry. Moreover, Cummins Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 0.5, and the rate over the past five years is 1.5. This trend accentuates the company's continued capability to drive growth.
Conclusion: Cummins Inc's Position for Outperformance
Considering Cummins Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors looking for companies with similar robust financial health and growth prospects can explore more options using the GF Score Screen. As Cummins Inc continues to navigate the competitive landscape with its strong financial foundation and growth strategies, it remains a compelling choice for value investors seeking market outperformance.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
