DCF Studio

    CMI · NYQ · Industrials

    Cummins Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 247.09

    Market price

    USD 500.60

    Implied upside

    -50.6%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    Value Per Share

    Perpetuity growth
    USD 247.09-50.6%
    Exit multiple
    USD 421.43-15.8%
    Market price
    USD 500.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn3bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 37.7bnUSD 41.3bnUSD 45.0bnUSD 48.5bnUSD 52.0bnUSD 55.1bnUSD 58.0bnUSD 60.5bnUSD 62.6bnUSD 64.1bn+6.1%
    EBITUSD 3.2bnUSD 3.5bnUSD 3.9bnUSD 4.2bnUSD 4.5bnUSD 4.7bnUSD 5.0bnUSD 5.2bnUSD 5.4bnUSD 5.5bn+6.1%
    NOPATUSD 2.6bnUSD 2.8bnUSD 3.0bnUSD 3.3bnUSD 3.5bnUSD 3.7bnUSD 3.9bnUSD 4.1bnUSD 4.2bnUSD 4.3bn+6.1%
    Add depreciation & amortisationUSD 1.1bnUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.6bnUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.9bnUSD 2.0bn+6.1%
    Less capital expenditureUSD -1.3bnUSD -1.5bnUSD -1.7bnUSD -1.8bnUSD -2.0bnUSD -2.2bnUSD -2.3bnUSD -2.5bnUSD -2.6bnUSD -2.7bn+8.5%
    Capex, % of revenue3.5%3.6%3.7%3.8%3.9%3.9%4.0%4.1%4.2%4.3%-
    Less increase in working capitalUSD -873.9mUSD -804.0mUSD -800.4mUSD -781.9mUSD -747.6mUSD -697.0mUSD -630.3mUSD -548.1mUSD -451.6mUSD -342.9m-9.9%
    Free cashflow to firmUSD 1.5bnUSD 1.8bnUSD 2.0bnUSD 2.2bnUSD 2.4bnUSD 2.5bnUSD 2.7bnUSD 2.9bnUSD 3.1bnUSD 3.2bn+8.8%
    Discount factor0.95700.87630.80250.73490.67300.61630.56440.51680.47330.4334-
    Present valueUSD 1.4bnUSD 1.6bnUSD 1.6bnUSD 1.6bnUSD 1.6bnUSD 1.6bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.4bn-
    Present Value Of The ForecastUSD 15.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.157Reported 1.235, pulled toward 1.0 (Blume)
    Cost of equity9.79%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 11.7x interest cover. Book interest / average debt was lower, at 4.2%.
    Market capitalisationUSD 68.9bn89.5% of capital
    Total debtUSD 8.1bn10.5% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.20%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 247.09

    61% of EV

    Forecast FCFF, final year
    USD 3.2bn
    Capex at depreciation, working capital in reinvestment
    USD 4.3bn
    Less reinvestment at g/ROIC (18.2% of NOPAT)
    USD -791.5m
    Capitalised
    USD 3.6bn
    ROIC (reported)
    13.7%
    Terminal value, undiscounted
    USD 54.4bn
    Terminal value, discounted
    USD 23.6bn
    Enterprise value
    USD 38.8bn
    Less net debt
    USD 4.5bn
    Equity value
    USD 34.3bn

    Exit at 14.8x EBITDA

    Value per shareUSD 421.43

    76% of EV

    Terminal value, undiscounted
    USD 110.2bn
    Terminal value, discounted
    USD 47.8bn
    Enterprise value
    USD 63.0bn
    Less net debt
    USD 4.5bn
    Equity value
    USD 58.5bn

    Spread between methods: 52%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.20%350.98362.30376.58394.88418.84
    8.20%288.30293.61300.29308.73319.48
    9.20%242.26244.34247.09250.65255.24
    10.20%207.09207.36207.95208.93210.38
    11.20%179.41178.64178.01177.56177.33

    Outlined: this model. Green text: above today's price of 500.60. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year6.2%6.7%16.0%
    EBIT margin11.5%8.6%15.4%
    Discount rate-9.2%6.2%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.