Value
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.5 |
| P/S | 8.4 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 6.3 |
| PEG | 4.8 |
| Analyst target | 4.0 |
- ▸Forward P/E: 20.5x
- ▸PEG: 1.67
CMI · Why this verdict
Why Cummins (CMI) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Cummins trades just below its analyst consensus target with essentially no remaining upside, has missed earnings estimates in three consecutive quarters by an average of roughly 16%, and carries two high-severity concentration risks — a combination that makes the current setup unfavorable for new or increased positions despite technical support above the 200-day moving average.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The three most recent quarters have each missed consensus EPS estimates by significant margins — -16.3%, -14.9%, and -19.1% respectively — with an average surprise of -6.4% across all four quarters, suggesting a sustained pattern of earnings deterioration that analyst estimates have not yet fully reflected. Earnings | The earnings miss streak ends when EPS surprises turn positive by more than 5% for 2 consecutive quarters, indicating that estimates have been reset low enough to allow beats. | →Stable |
| CounterThe oldest of the four reported quarters delivered a 24.7% upside surprise, which means the company has demonstrated the capacity to beat substantially; a single positive estimate reset could quickly snap the miss streak. | ||
At $679.71, the stock sits just $0.83 below its analyst consensus target of $680.54 — approximately 0.1% of remaining headroom — meaning the current price already reflects the full consensus bull case, leaving no reward cushion for new buyers and a negative asymmetry ratio. Price targets | Meaningful upside returns when analyst consensus targets are revised above $748 (more than 10% above the current price), re-establishing a sufficient reward margin. | →Stable |
| CounterIf earnings stabilize and analysts revise targets higher following a positive quarter, the target ceiling can rise quickly; a stock near its current target is one upgrade cycle away from restored upside. | ||
Two high-severity and one medium-severity concentration risks have been identified — geographic exposure to China-based investees and dependence on single-source parts and raw materials — each of which represents a vulnerability that could impair earnings if either relationship is disrupted. Risk breakdown | Revenue grows more than 5% year-over-year for 2 consecutive quarters with no concentration-related charges reported, demonstrating that these structural vulnerabilities have not translated into financial harm. | →Stable |
| CounterConcentration risks that have not materialized in prior periods may be well-managed; a long-established supplier or investee relationship implies both parties have incentives to maintain continuity, reducing the practical probability of disruption. | ||
Despite the earnings headwinds, the stock trades above its 200-day moving average with rising on-balance volume — indicating that institutional buying is occurring and that technical support is intact, which limits near-term downside. Momentum breakdown | Price continues to hold above the 200-day moving average and on-balance volume maintains an upward trend over the next six months. | →Stable |
| CounterTechnical support can fail quickly if earnings deteriorate further; a fourth consecutive miss could trigger a gap lower that breaks moving-average support and reverses the accumulation signal. | ||
The three most recent quarters have each missed consensus EPS estimates by significant margins — -16.3%, -14.9%, and -19.1% respectively — with an average surprise of -6.4% across all four quarters, suggesting a sustained pattern of earnings deterioration that analyst estimates have not yet fully reflected.
→StableEarnings
- Expectation
- The earnings miss streak ends when EPS surprises turn positive by more than 5% for 2 consecutive quarters, indicating that estimates have been reset low enough to allow beats.
CounterThe oldest of the four reported quarters delivered a 24.7% upside surprise, which means the company has demonstrated the capacity to beat substantially; a single positive estimate reset could quickly snap the miss streak.
At $679.71, the stock sits just $0.83 below its analyst consensus target of $680.54 — approximately 0.1% of remaining headroom — meaning the current price already reflects the full consensus bull case, leaving no reward cushion for new buyers and a negative asymmetry ratio.
→StablePrice targets
- Expectation
- Meaningful upside returns when analyst consensus targets are revised above $748 (more than 10% above the current price), re-establishing a sufficient reward margin.
CounterIf earnings stabilize and analysts revise targets higher following a positive quarter, the target ceiling can rise quickly; a stock near its current target is one upgrade cycle away from restored upside.
Two high-severity and one medium-severity concentration risks have been identified — geographic exposure to China-based investees and dependence on single-source parts and raw materials — each of which represents a vulnerability that could impair earnings if either relationship is disrupted.
→StableRisk breakdown
- Expectation
- Revenue grows more than 5% year-over-year for 2 consecutive quarters with no concentration-related charges reported, demonstrating that these structural vulnerabilities have not translated into financial harm.
CounterConcentration risks that have not materialized in prior periods may be well-managed; a long-established supplier or investee relationship implies both parties have incentives to maintain continuity, reducing the practical probability of disruption.
Despite the earnings headwinds, the stock trades above its 200-day moving average with rising on-balance volume — indicating that institutional buying is occurring and that technical support is intact, which limits near-term downside.
→StableMomentum breakdown
- Expectation
- Price continues to hold above the 200-day moving average and on-balance volume maintains an upward trend over the next six months.
CounterTechnical support can fail quickly if earnings deteriorate further; a fourth consecutive miss could trigger a gap lower that breaks moving-average support and reverses the accumulation signal.
Per-dimension breakdown
Quality
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.3 |
| ROA | 4.8 |
| Gross margin | 1.2 |
| Op margin | 3.9 |
| Net margin | 3.9 |
| Current ratio | 6.1 |
| FCF quality | 4.9 |
| Moat | 5.6 |
| Piotroski F | 7.8 |
- ▸Earnings quality warning: 63% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
1.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.2 |
| EPS growth | 0.0 |
Momentum
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.0 |
| Analyst rating | 7.5 |
| Price target | 5.6 |
- ▸LLM news sentiment: +0.60 (n=3)
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $9,829,505 (0.010% of mkt cap)
Peer rank
3.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.1 |
| quality rank | 5.9 |
| growth rank | 1.7 |
- ▸Superior ROE vs peers
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.6 |
| support resistance | 2.0 |
| 52w position | 9.4 |
| gap | 5.0 |
Risk (lower is worse)
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.1 |
| days to cover | 8.8 |
| volatility | 2.8 |
| put call | 7.7 |
| implied vol | 6.0 |
| beta | 6.0 |
| debt equity | 7.3 |
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 6.0 |
| dividend safety | 4.8 |
| news activity | 7.0 |
- ▸Strong earnings: 3B/1M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.1>=4.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:39d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.5=NEGATIVE
Warning (1)
- MOMENTUM:5.1<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-0.53
Upside
-6.4%
Downside
12.2%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 58, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.5=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.53 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.1, Risk (lower is worse) at 6.8, and Catalyst at 5.8; the weakest are Growth at 1.6, Peer rank at 3.2, and Technical at 4.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.53 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The three most recent quarters have each missed consensus EPS estimates by significant margins — -16.3%, -14.9%, and -19.1% respectively — with an average surprise of -6.4% across all four quarters, suggesting a sustained pattern of earnings deterioration that analyst estimates have not yet fully reflected.
Trip ifEPS surprise exceeds +5% for 2 consecutive reported quarters, breaking the pattern of consecutive earnings underperformance.
- P2At $679.71, the stock sits just $0.83 below its analyst consensus target of $680.54 — approximately 0.1% of remaining headroom — meaning the current price already reflects the full consensus bull case, leaving no reward cushion for new buyers and a negative asymmetry ratio.
Trip ifAnalyst consensus price target is revised above $748, restoring more than 10% upside from the current price level.
- P3Two high-severity and one medium-severity concentration risks have been identified — geographic exposure to China-based investees and dependence on single-source parts and raw materials — each of which represents a vulnerability that could impair earnings if either relationship is disrupted.
Trip ifRevenue grows more than 5% year-over-year for 2 consecutive quarters with no concentration-related charges, indicating that geographic and supplier risks have not materialized.
- P4Despite the earnings headwinds, the stock trades above its 200-day moving average with rising on-balance volume — indicating that institutional buying is occurring and that technical support is intact, which limits near-term downside.
Trip ifPrice falls below the 200-day moving average for 10 or more consecutive trading days, breaking technical support.