Cummins Inc. (CMI) DCF Valuation
Transparent DCF models put Cummins Inc. (CMI)'s fair value in a range of $158.25 – $304.69 — the low end is TGM's conservative base case (5% FCF growth, 10% discount), the high end the analyst consensus (FMP). Today's price of $636.34 sits above that range — by these conservative assumptions it looks richly valued; the reverse-DCF below is the better lens for a high-growth name.
Reverse DCF: at today's $636.34, the market is pricing in roughly +22.0%/yr free-cash-flow growth over the next decade (at a 10% required return) — versus its actual 5-year FCF CAGR of +4.3%. The price is betting on acceleration above its track record.
Current Price
$636.34
Fair-Value Range
$158.25 – $304.69
Market-Implied Growth
+22.0%/yr
vs +4.3% 5Y actual
CMI DCF Fair Value Calculator
Edit the assumptions to see how they change the estimated fair value. Illustrative model — not investment advice. Defaults to a conservative base case; the analyst (FMP) DCF, where available, is shown as a reference below.
Base inputs: FCF $1.6B · 0.14B shares · net debt $4.7B
Estimated Fair Value
$158.25
-75.1% vs $636.34
Sensitivity — fair value by discount rate × terminal growth
How the estimated fair value shifts with the discount rate (WACC) and terminal growth, holding your 5.0%/yr FCF growth and 10-year horizon fixed. Green = above today's $636.34; red = below. Your current case is outlined.
| WACC ↓ / Terminal → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 8.0% | $205 | $217 | $232 | $249 | $270 |
| 9.0% | $171 | $180 | $189 | $201 | $214 |
| 10.0% | $146 | $151 | $158 | $166 | $175 |
| 11.0% | $125 | $130 | $135 | $140 | $146 |
| 12.0% | $109 | $112 | $116 | $120 | $125 |
About Cummins Inc.
Cummins Inc. is a global innovator in power solutions, responsible for the design, manufacturing, distribution, and maintenance of a broad array of diesel and natural gas engines, alongside cutting-edge electric and hybrid powertrains, and associated components. Its operations are strategically divided into five segments: Engine, Distribution, Components, Power Systems, and New Power. The company's extensive engine portfolio, available under the Cummins brand and others, powers a vast range of heavy and medium-duty applications, including commercial trucks, buses, recreational vehicles, light-duty automobiles, construction and mining equipment, marine vessels, railway systems, oil and gas operations, defense, and agriculture. Complementing these engines, Cummins provides both new and remanufactured parts and comprehensive servicing. Beyond its core engine offerings, Cummins delivers sophisticated power generation systems, high-horsepower engines, and specialized application engineering. It also offers custom-designed assemblies, retail and wholesale aftermarket components, and expert repair services conducted both in-shop and on-site. The company's technological scope extends to emission control solutions, turbochargers, a variety of filtration systems (for air, fuel, lubricants, and hydraulics), coolants, fuel additives, and advanced electronic control modules, sensors, and supporting software. Fuel systems, both new and reconditioned, are also a key part of their product line, as are automated transmissions. For electrical power generation, Cummins provides standby and primary power generators, complete with controls, paralleling systems, and transfer switches, featuring products like Stamford and AVK A/C alternators. Embracing future energy demands, the company is a frontrunner in electrified power systems, encompassing battery technologies, fuel cells, and hydrogen production. This includes a robust offering of filtration, aftertreatment, control, air handling systems, automated transmissions, electric power generation, and battery solutions. Cummins distributes its diverse product range to original equipment manufacturers, an extensive network of distributors and dealers, and various other clientele worldwide. Founded in 1919 as the Cummins Engine Company, the enterprise adopted its current name, Cummins Inc., in 2001 and maintains its headquarters in Columbus, Indiana.
- Sector
- Industrials
- Industry
- Industrial - Machinery
- CEO
- Jennifer W. Rumsey