ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Cummins's annualized return on capital (ROC %) for the quarter that ended in Mar. 2026 was 12.09%.
As of today (2026-06-28), Cummins's WACC % is 12.97%. Cummins's ROC % is 11.73% (calculated using TTM income statement data).
Cummins earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Cummins (XTER:CUM) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Cummins's WACC % is 12.97%. Cummins's ROC % is 11.73% (calculated using TTM income statement data).
Cummins earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Cummins ROC % Related Terms
Cummins ROC % Historical Data
* Premium members only.
The historical data trend for Cummins's ROC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Cummins (XTER:CUM) has a ROC % of 12.09% as of Mar. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Cummins and its competitors.
Is Cummins' ROC % too high?
Cummins' current ROC % is 12.09%. The Industrial Products industry median ROC % is 5.22. Cummins' value of 12.09% is 131.8% above this industry median. Overall, Cummins has a GF Score™ of 85/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Cummins' ROC % compare to EMR and PH?
Cummins' ROC % of 12.09% can be compared against companies in the Industrial Products industry. The industry median ROC % is 5.22. Cummins' value of 12.09% is 131.8% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for an Industrial Products company?
The median ROC % among Industrial Products companies is 5.22, based on 3,034 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Cummins's current ROC % of 12.09% is 131.8% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Cummins and its competitors. For the Industrial Products industry, the median ROC % is 5.22 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Cummins's current ROC % is 12.09%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Cummins stock overvalued right now?
Based on GuruFocus' analysis, Cummins (XTER:CUM) is currently considered Significantly Overvalued. The stock's GF Value™ is €276.21, compared to a current price of €581.60 — trading 110.6% above its estimated fair value. The current ROC % is 12.09% and 131.8% above the Industrial Products industry median of 5.22. Cummins' overall GF Score™ is 85/100 with 9 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Cummins (XTER:CUM), the current ROC % is 12.09% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Cummins (XTER:CUM) Overvalued in 2026?
Based on GuruFocus' analysis, Cummins stock appears to be overvalued.
The current stock price of €581.60 is trading 110.6% above its estimated GF Value™ of €276.21.
GuruFocus considers Cummins to be Significantly Overvalued.
Key valuation signals for XTER:CUM:
ROC %: 12.09%
GF Value™: €276.21 vs. price of €581.60 (110.6% above fair value)
Industry Position: 131.8% above the Industrial Products median
No single metric tells the full story. See the XTER:CUM stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Cummins is a leading manufacturer of diesel and other engines used in heavy- and medium-duty commercial trucks, off-highway equipment, and locomotives, in addition to prime power and standby generators. The company also sells powertrain components, which include filtration products, transmissions, turbochargers, aftertreatment systems, and fuel systems. Sales are approximately 60% US and Canada and 40% rest of the world. Much of Cummins' foreign sales (China, India, and so forth) are through joint ventures. The company operates 650 distributors and over 19,000 dealer locations across 190 countries. Cummins' business model is unique as it competes with many of its heavy-duty truck manufacturer customers, which also make their own engines.
85GF Score
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