Cummins Inc. (CMI)
Quantitative Summary
DeterministicCMI trades at 33.6x earnings, roughly in line with its sector average of 44.7x. Financial health is average: Piotroski 5/9, Altman Z 5.1. DCF fair value of $299 implies 52% downside based on model assumptions.
Generated deterministically from quant metrics and financial statements. Not a recommendation.
Algorithmic Teardown
AI-GeneratedThe company demonstrates a robust capital allocation profile with an ROIC-WACC spread of +2.8%, indicating that generated returns exceed the cost of capital, though this margin is relatively narrow compared to high-growth peers. The DuPont decomposition reveals that the 21.2% return on equity is primarily engineered through significant financial leverage (Equity Multiplier of 2.54x) rather than operational efficiency or pricing power, as evidenced by a declining revenue trajectory of -1.3% YoY and neutral profitability factor exposure. Despite this structural reliance on debt to amplify returns, the balance sheet appears stable with an Altman Z-Score of 4.8 suggesting low bankruptcy risk, while the Beneish M-Score of -2.50 points toward high earnings quality and a lack of manipulation incentives. The Piotroski F-Score of 5/9 reflects a mixed fundamental trend, neither showing strong momentum nor severe deterioration in recent financial statements.
Valuation metrics present a significant divergence between current market pricing and intrinsic value models derived from free cash flow assumptions. Trading at a forward P/E of 26.8x, the stock commands a premium that appears inconsistent with its stagnant top-line growth; however, this valuation is supported by an implied ten-year FCF growth rate of 22.6%. In contrast, discounted cash flow analysis suggests a fair value of $305, implying approximately -43.3% downside from current levels if market expectations for future expansion are not met. This discrepancy indicates the market may be pricing in aggressive growth scenarios that have yet to materialize given the recent revenue contraction and neutral operating leverage profile.
Risk-adjusted performance data highlights a notable anomaly where the stock has generated substantial excess returns relative to its factor exposures, with an annual Fama-French Alpha of 18.16%. This strong alpha is driven largely by value characteristics (HML score of 0.159) rather than profitability premiums, suggesting the asset may be undervalued based on traditional metrics despite recent insider activity showing $19,760,836 in net selling over the last ninety days. The combination of high alpha generation and significant insider outflows creates a complex risk-reward dynamic where short-term sentiment appears bearish, yet long-term factor models continue to price the equity favorably against its historical cost of capital and sector peers.
Generated by LLM from quantitative data inputs. May contain inaccuracies. Not investment advice.
DCF Sandbox
Interactive5-year two-stage DCF. Terminal growth 3%. Default sliders match the pre-computed base case. Drag to explore scenarios. Not investment advice.
The growth rate the market implicitly expects over the next 10 years to justify today's price. Compare with historical growth of -1% YoY revenue.
Sensitivity Matrix
| TG ↓ / WACC → | 9.3% | 11.3% | 13.3% |
|---|---|---|---|
| 2% | $359 | $271 | $214 |
| 3% | $410 | $299 | $231 |
| 4% | $480 | $334 | $252 |
Center = base case. Green = >10% upside, Red = >10% downside vs $672.67.
Pre-computed DCF: WACC=11.3%, terminal growth 3%. Fair value $299 (-51.7%). Not investment advice.
Valuation Context
Currently trading 21% above its 5-year average P/E of 24.9x.
Price Chart with Moving Averages
Technical Setup
AI GeneratedCummins Inc. is trading at $677.87 within the Industrials sector, presenting a technical snapshot where price action sits elevated against its historical range. The current valuation implies significant market confidence in the company's operational trajectory, yet such high absolute levels often compress downside buffers relative to recent peaks while simultaneously demanding robust earnings validation to sustain support. Without access to specific drawdown metrics or volatility bands for this exact session, one must infer that any sharp pullback from these highs could trigger stop-loss cascades if technical buyers fail to defend key psychological thresholds immediately. The fundamental backdrop of the industrial sector typically introduces cyclical headwinds and tailwinds that can abruptly alter momentum structures. If current price strength relies heavily on short-term speculation rather than sustained order book growth, the risk profile shifts from structural resilience to fragile extrapolation. In this scenario, even minor negative sentiment regarding macroeconomic demand or supply chain constraints could precipitate a rapid reversion toward mean values, exposing the asset to heightened beta during periods of market stress. Ultimately, the interplay between the current price level and unseen volatility regimes suggests that momentum remains precarious without corroborating volume expansion or widening moving average alignments. The technical setup indicates potential for continued appreciation only if underlying fundamentals continue to outpace sector-wide averages; conversely, any divergence in earnings expectations could expose latent weakness, leading to accelerated corrections where risk management becomes the primary driver of price discovery rather than bullish conviction.
Quant Health Deep Dive
Profitability & Value Creation
✅ Conservative payout — room for dividend increases.
DuPont Analysis — ROE Decomposition
Breaking down Return on Equity to see how the company generates its ROE — efficiency, margins, or leverage.
Balance Sheet Health
Insider Activity (Last 90 Days)
Open-market buys vs sells by company insiders. Source: yfinance.
Earnings Surprise History
EPS estimates vs actuals for the most recent reported quarters. Source: yfinance.
Dividend History
| Date | Amount | Change |
|---|---|---|
| 2026-05-22 | $2.0000 | 0.0% |
| 2026-02-20 | $2.0000 | 0.0% |
| 2025-11-21 | $2.0000 | 0.0% |
| 2025-08-22 | $2.0000 | +9.9% |
| 2025-05-23 | $1.8200 | 0.0% |
| 2025-02-21 | $1.8200 | 0.0% |
| 2024-11-22 | $1.8200 | 0.0% |
| 2024-08-23 | $1.8200 | +8.3% |
| 2024-05-23 | $1.6800 | 0.0% |
| 2024-02-22 | $1.6800 | 0.0% |
| 2023-11-22 | $1.6800 | 0.0% |
| 2023-08-24 | $1.6800 | +7.0% |
Dividend and split data from SEC filings and market data. Amounts are per share, not adjusted for splits. Source: yfinance.
Risk Profile
Sharpe = risk-adjusted return (higher is better). Max drawdown = largest peak-to-trough decline. 1,200+ trading days.
Underwater (Drawdown from Peak)
How far below the all-time high the price has been over time. Deeper = more pain for holders.
Rolling 60-Day Beta vs S&P 500 (VOO)
How the stock's sensitivity to market moves changes over time. β > 1 = more volatile than the market.
Fama-French 5-Factor Exposure
Academic factor model decomposition — what's really driving this stock's returns.
Fama-French 5-Factor Model. Data: Kenneth French Data Library. Regression over 3 years of daily returns.
Fundamentals
Passive Flow Attribution
ETF Draft EffectWhen investors buy or sell ETFs like XLI or VOE, the fund manager is mechanically forced to buy or sell CMI shares regardless of Cummins Inc.'s individual fundamentals. We estimate $13.2B of passive capital is structurally linked to CMI through 8 tracked ETFs. This substantial passive exposure means that ETF inflows and outflows — not company fundamentals — can dominate daily volume on this stock.
Passive exposure = Σ (ETF AUM × stock weight in ETF) across 8 tracked ETFs. Actual passive ownership is larger (includes mutual funds). Not investment advice.
ETF Contagion Visualizer
Simulate a price drop in Cummins Inc. to visualize passive redemption contagion across ETFs and collateral stocks.
If Cummins Inc. (CMI) experiences a significant drawdown, ETF redemptions can create collateral selling pressure on co-held stocks. Our model identifies CATERPILLAR INC (CAT) as the most exposed collateral stock, sharing 1 ETFs with CMI. This is the "Passive Contagion" effect described in the Inelastic Market Hypothesis.
Contagion model based on shared ETF exposure and constituent weights across 36 tracked ETFs. Estimated selling pressure is a simplified model — actual impact depends on market liquidity, ETF redemption mechanics, and market-maker activity.
CMI Ownership Dynamics
Passive funds hold 1 in every 7 CMI shares, reducing daily market volatility.
Cummins Inc. (CMI) exerts notable gravity on the passive index market, currently representing 1.7% of the State Street Industrial Select Sector SPDR ETF (XLI) and 1.6% of the VOE (VOE). Across 34 tracked ETFs, approximately 21M shares (15.3% of float) are held by passive funds and rarely trade on the open market. This level of passive ownership means index rebalances can create outsized volume events.
ETFs with Highest CMI Exposure
Float lock-up computed from 34 ETFs tracked by SecuritiesDB. Actual passive ownership is higher (includes mutual funds, pension funds, etc.).
CMI Institutional Volume Profile
252-day volume distribution by price level. The Point of Control (POC) marks — the price where the most institutional volume transacted — an implicit support/resistance floor.
The highest-volume price zone for Cummins Inc. over the past year sits near $417.87 (12% of 252-day volume). The current price of $672.67 trades 61.0% above this institutional floor — a sign of upside momentum, though a pullback to the POC zone is a common reversion target.
Volume Profile computed from 252 trading days of OHLCV data. Volume allocated to price bins proportionally based on daily high-low range. Not investment advice.
CMI Capital Efficiency
How efficiently does Cummins Inc. convert operating profits into free cash? The FCF Conversion ratio measures the gap between accounting earnings and real cash generation.
Cummins Inc. converts 44% of its EBITDA into free cash flow, a healthy conversion rate indicating efficient capital management — the business generates substantial cash after reinvestment. The 56% reinvestment rate signals aggressive capacity expansion. The positive ROIC-WACC spread of 2.6% confirms that reinvested capital creates shareholder value.
Capital efficiency = Free Cash Flow ÷ EBITDA. Reinvestment = (EBITDA − FCF) ÷ EBITDA. Metrics from latest annual filings. Not investment advice.
Fails-to-Deliver (FTD) History
SEC-reported settlement failures. Elevated FTDs can indicate high short-selling pressure, operational settlement issues, or naked shorting activity.
| Date | Failed Shares | Close Price | Notional Value |
|---|---|---|---|
| 2026-05-13 | 14,844 | $704.56 | $10.5M |
| 2026-04-20 | 498 | $627.18 | $312,335.64 |
| 2026-04-15 | 3 | $615.56 | $1,846.68 |
| 2026-04-10 | 20 | $610.99 | $12,219.8 |
| 2026-03-25 | 14 | $554.75 | $7,766.5 |
| 2026-03-16 | 11,315 | $535.71 | $6.1M |
| 2026-03-12 | 296 | $556.14 | $164,617.44 |
| 2026-03-06 | 4,749 | $556.07 | $2.6M |
| 2026-03-02 | 34 | $583.87 | $19,851.58 |
| 2026-02-20 | 500 | $596.91 | $298,455 |
| 2026-02-09 | 40 | $577.73 | $23,109.2 |
| 2026-02-03 | 56 | $595.13 | $33,327.28 |
| 2026-02-02 | 7 | $578.82 | $4,051.74 |
| 2026-01-23 | 29 | $583.07 | $16,909.03 |
| 2026-01-21 | 15,020 | $565.80 | $8.5M |
| 2026-01-20 | 482 | $578.94 | $279,049.08 |
| 2025-12-22 | 3,002 | $506.72 | $1.5M |
| 2025-12-11 | 2 | $524.53 | $1,049.06 |
| 2025-12-03 | 6 | $501.50 | $3,009 |
| 2025-11-24 | 1,123 | $472.51 | $530,628.73 |
| 2025-11-21 | 71 | $465.19 | $33,028.49 |
| 2025-11-19 | 81 | $464.92 | $37,658.52 |
| 2025-11-14 | 148 | $467.49 | $69,188.52 |
| 2025-11-13 | 626 | $479.49 | $300,160.74 |
| 2025-11-12 | 2,445 | $476.01 | $1.2M |
| 2025-11-07 | 317 | $462.80 | $146,707.6 |
| 2025-10-30 | 12 | $441.26 | $5,295.12 |
| 2025-10-27 | 18 | $421.45 | $7,586.1 |
| 2025-10-22 | 793 | $417.97 | $331,450.21 |
| 2025-10-15 | 61 | $416.65 | $25,415.65 |
Source: SEC Regulation SHO FTD data. Data is reported with a ~30 day delay. High FTD quantities relative to average daily volume may indicate settlement stress.
Price Correlations
Statistical correlation of daily returns with other stocks. High correlations indicate stocks that move together; negative correlations can offer diversification.
| Peer | 252-Day (1Y) | 126-Day (6M) | Direction |
|---|---|---|---|
| WTGXX | NaN | NaN | |
| CAT | 0.756 | 0.771 | High co-movement |
| PH | 0.681 | 0.647 | Moderate |
| EMR | 0.631 | 0.624 | Moderate |
| WAB | 0.628 | 0.645 | Moderate |
| DOV | 0.618 | 0.538 | Moderate |
| PCAR | 0.616 | 0.531 | Moderate |
| IR | 0.615 | 0.564 | Moderate |
| ETN | 0.613 | 0.668 | Moderate |
| TER | 0.596 | 0.644 | Moderate |
Pearson correlation of daily log returns. 252d ≈ 1 trading year. Computed from price history. Not investment advice.
Compare CMI to Peers
Quant metrics computed deterministically from financial statements and price data. Updated: 2026-06-02.
SecuritiesDB provides programmatic data aggregation for informational purposes only. None of the metrics, summaries, or algorithmic flags constitute a recommendation to buy or sell any security.