QS Research · Michael Burry's Scion Capital analyst template · 2006
CUMMINS INC (CMI)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -9% · upside +34%
The market is treating a North American pickup-truck guidance cut as if Cummins' whole earnings base were impaired, while Q3 2026 set records (sales $9,438M +13%, EBITDA $1.8B/18.9%, net income $1,140M) and Power Systems orders run into late 2028. I use the TTM Sep-30-2026 base from section 13: EBITDA $5.62B, net debt $2.60B, leases $562M, 137.08M shares; no cycle normalization. Base at today's 11.4x EV/EBITDA is roughly today's $450.07 (0%); downside at 10.6x is 10.6*$5.62B=$59.6B EV, less $3.16B net obligations = $56.4B/137.08M ≈ $412 (-8.6%); upside at 15.3x is 15.3*$5.62B=$86.0B EV, less $3.16B = $82.8B/137.08M ≈ $604 (+34.2%), with the higher multiple justified only by the cited data-center power backlog/2030 target catalyst. The base case is not +30%, so the rule gives watch, not long; the setup is interesting because downside is shallow and upside is large if the power re-rating occurs.
Key numbers
- Share price: $450.07
- Market cap: $61.69B
- Latest financial period: FY Dec 2025 to Sep 30, 2026
- Revenue (FY Dec 2025): $33.67B
- EV / EBITDA (TTM): 11.4x
- P/E (TTM): 18.6x
- Price / book: 4.63x
The 15 boxes
- ✓ 1. Long-form business notes
Cummins is a five-segment engine, components, distribution and power-systems manufacturer selling to OEMs and through a distributor/dealer network; FY2025 segment sales before intersegment eliminations were Engine 26%, Components 25%, Distribution 30% and Power Systems 18%. Revenue grew from $19.81B in FY2020 to $33.67B in FY2025, with operating income $2.27B to $4.03B, while the portfolio changed through the 2024 Atmus split-off and the Accelera electrolyzer exit. PACCAR was 13% of FY2025 consolidated net sales and the top four OEM customers were 31%.
- ○ 2. Competitive advantage
CMI shows real scale and an embedded OEM position: FY2025 revenue was $33.67B, gross profit $8.52B and operating income $4.03B, and the 10-K says OEMs have historically outsourced engine production to Cummins for quality, emission compliance and systems integration. But the record is not a clean durable moat: gross margin sat around 24-25% in FY2020-FY2025, FY2023 net income to common fell to $735.0M in the year of a $2.0B Q4 2023 emissions charge, and the 10-K flags OEM in-sourcing, single-source supply, cyclical demand and uncontrolled China JVs. The sources do not name specific competitors; they refer to other companies and to truck OEMs that build their own engines.
- ✓ 3. 10-Q takeaways
Q3 2026 (ended 2026-09-30) net sales were $9,438M, up 13% from $8,317M, with gross margin of 27.7% versus 25.6% and operating income of $1,444M versus $852M; EBITDA was a record $1.8B, or 18.9% of sales (release). Net income attributable to Cummins was $1,140M / $8.25 diluted versus $536M / $3.86, a comparison flattered by the absence of Q3 2025's $240M of Accelera non-cash charges and by $0.54 of favorable discrete tax items in the current quarter. FY2026 guidance was narrowed to ~10% revenue growth (from 10%-13%) and ~18.2% EBITDA margin, blamed on weaker North American pickup truck demand, with Q4 revenues expected to step up to a record. Cash generation and capital returns were strong: $3.2B of nine-month operating cash flow, $4.2B of cash and marketable securities, $833M of buybacks and a 10% dividend raise.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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