| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 194.80 | -66 |
| Intrinsic value (DCF) | 141.53 | -75 |
| Graham-Dodd Method | 72.20 | -87 |
| Graham Formula | 180.90 | -69 |
Cummins Inc. (LSE: 0I58.L) is a global leader in designing, manufacturing, and servicing diesel and natural gas engines, electric and hybrid powertrains, and related components. Headquartered in Columbus, Indiana, Cummins operates through five key segments: Engine, Distribution, Components, Power Systems, and New Power. The company serves diverse markets, including heavy and medium-duty trucks, buses, construction, mining, marine, rail, and defense, offering both new and remanufactured parts. Cummins is also a pioneer in electrified power systems, developing battery, fuel cell, and hydrogen production technologies. With a strong aftermarket presence, the company provides filtration, emission solutions, turbochargers, and automated transmissions under well-known brands like Stamford and AVK. Founded in 1919, Cummins has evolved into a critical player in the industrial capital goods sector, driving innovation in sustainable power solutions while maintaining a robust global distribution network.
Cummins Inc. presents a compelling investment case due to its diversified revenue streams, strong market position in engine manufacturing, and growing focus on electrification and hydrogen technologies. The company's $34.1 billion revenue and $3.95 billion net income (FY 2024) reflect operational resilience, supported by a healthy dividend yield ($7.28 per share). However, risks include exposure to cyclical industries like trucking and construction, regulatory pressures on emissions, and high capital expenditures ($1.2 billion) as it transitions to cleaner energy solutions. With a beta of 1.01, Cummins closely tracks market volatility, making it a stable but not defensive pick. Investors should weigh its innovation pipeline against potential margin pressures from R&D and supply chain costs.
Cummins holds a competitive edge through its vertically integrated supply chain, extensive aftermarket network, and technological leadership in alternative powertrains. Its Engine segment benefits from long-standing OEM partnerships, while the New Power division positions it ahead of peers in hydrogen and electrification. Unlike pure-play engine manufacturers, Cummins’ Components and Power Systems segments provide diversification, mitigating downturns in any single market. However, its reliance on diesel engines (still ~70% of revenue) exposes it to decarbonization headwinds. Competitors like PACCAR and Volvo Group are aggressively investing in electric trucks, while Tesla’s Semi poses a disruptive threat. Cummins’ scale and distribution reach are unmatched in emerging markets, but its R&D spending lags behind some European rivals focused solely on zero-emission technologies. The company’s ability to balance legacy diesel profitability with New Power growth will determine its long-term positioning.