Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, and engine-related component products. It operates through four segments: Engine, Distribution, Components, and Power Generation. The company was founded in 1919 and is based in Columbus, Indiana.
CMI Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for CMI, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Cummins Inc ranked in the 36th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. As for the metrics that stood out in our discounted cash flow analysis of Cummins Inc, consider:
As a business, CMI is generating more cash flow than 90.81% of positive cash flow stocks in the Industrials.
CMI's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than 32.56% of tickers in our DCF set.
Cummins Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 23.1. This coverage rate is greater than that of 88.06% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
FAST, J, MMS, TIKK, and VSEC can be thought of as valuation peers to CMI, in the sense that they are in the Industrials sector and have a similar price forecast based on DCF valuation.
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Navistar International Corp. (NYSE: NAV ) said Wednesday it will lay off 250 employees as part of a plan to close and sell its Melrose Park, Illinois, facility to an industrial park developer. Another 250 workers will transfer to other facilities. Navistar laid off 170 employees in 2018 in Melrose Park when it stopped making engines there. The company's need for engine testing declined as it has reduced engine manufacturing amid the trucking industry's transition to alternative fuel drivetrains. Under a long-term supply agreement reached in August, Cummins Inc. (NYSE: CMI ) will supply medium- and heavy-duty truck and bus engines to Navistar through the next two emission cycles, or 2026. Navistar will soon become part of TRATON Group, the commercial truck holding company … Full story av...