Cummins (CMI) Could Be 15% Undervalued Following Record Q2 Results And Higher Guidance
Cummins (CMI) just reported record second quarter sales and EBITDA, raised its full year 2026 revenue growth guidance to 10% to 13%, and outlined progress on its phased transition to new EPA emissions rules.
See our latest analysis for Cummins.
Despite Cummins lifting its 2026 revenue guidance after record quarterly results, the stock has eased in recent months, with a 30 day share price return of down 3.99% and a 90 day share price return of down 10.97%. Over a longer horizon, however, momentum has been positive, with a 1 year total shareholder return of 59.31% and a 5 year total shareholder return of 207.00%.
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Cummins is posting record sales and higher 2026 revenue guidance, yet the share price has slipped in recent months. Is this just sentiment cooling off after a strong run, or is the current price now out of line with fundamentals?
Most Popular Narrative: 14.8% Undervalued
The most followed Cummins narrative puts fair value at $748.81 per share, above the last close of $637.85, which points to upside embedded in its long term cash flow story.
Cummins is experiencing strong and steadily growing demand for power generation equipment, especially from the data center sector, driven by increasing urbanization, digital infrastructure expansion, and the global shift toward cleaner, efficient energy solutions; this diversification is lifting revenue and supporting higher EBITDA margins, offsetting softness in the traditional truck markets.
Curious what sits behind that fair value gap? The narrative leans on compounded revenue gains, rising margins, and a future earnings multiple that assumes durable demand. The exact mix of growth, profitability, and valuation expectations is where the story really gets interesting.
Result: Fair Value of $748.81 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Cummins still faces real swing factors, including potential prolonged weakness in North American truck demand and ongoing regulatory or tariff uncertainty that could raise costs and pressure margins.
Find out about the key risks to this Cummins narrative.
Another View on Cummins Valuation
The first narrative sees Cummins as about 14.8% undervalued against a $748.81 fair value. Yet the current P/E of 32.3x is higher than the US Machinery industry at 27.5x and only slightly below peers at 32.7x, while the fair ratio sits at 39.9x.
This mix of a premium to the industry, parity with peers, and headroom to the fair ratio suggests real valuation risk if expectations moderate, but also room for re rating if the story plays out. Which side of that trade off do you think is closer to reality?
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Sentiment around Cummins is clearly mixed, so this is a good time to look through the data and decide what matters most for you. To see what investors view as the main bright spots, take a closer look at the 3 key rewards.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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