Value
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.8 |
| P/S | 8.5 |
| EV/EBITDA | 0.3 |
| Fwd P/E | 6.6 |
| PEG | 4.9 |
| Analyst target | 5.0 |
- ▸Forward P/E: 19.5x
- ▸PEG: 1.59
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.
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VerdictSELL
Overall score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
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.
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.
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
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 6.4 |
| MA position | 4.0 |
| Volume | 1.6 |
- ▸Above 200-day MA
Sentiment
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.0 |
| Analyst rating | 7.5 |
| Price target | 7.0 |
- ▸LLM news sentiment: +0.60 (n=1)
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $9,829,505 (0.011% of mkt cap)
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.7 |
| quality rank | 6.4 |
| growth rank | 1.9 |
- ▸Superior ROE vs peers
Technical
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.2 |
| support resistance | 7.1 |
| 52w position | 7.9 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.9 |
| days to cover | 8.2 |
| volatility | 1.9 |
| put call | 6.8 |
| implied vol | 4.4 |
| beta | 6.1 |
| debt equity | 7.3 |
| news risk | 6.0 |
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 4.8 |
| news activity | 6.0 |
- ▸Earnings concerns: 1B/3M
- ▸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)
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.60
- EARNINGS_PROXIMITY:31d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.5<4.5
- ASYMMETRY:0.3<1.5@spot
Warning (0)
none
Reward-to-Risk
0.29
Upside
+2.5%
Downside
8.5%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear 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 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.5<4.5, ASYMMETRY:0.3<1.5@spot) reinforce the read. Current asymmetry R:R is 0.29 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.5, Technical at 7.4, and Risk (lower is worse) at 6.2; the weakest are Growth at 1.6, Catalyst at 3.5, and Peer rank at 3.5. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.29 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consecutive Earnings Misses
Trip ifEPS surprise exceeds +5% for 2 consecutive reported quarters, breaking the pattern of consecutive earnings underperformance.
- P2Price At Target No Upside
Trip ifAnalyst consensus price target is revised above $748, restoring more than 10% upside from the current price level.
- P3High Severity Concentration Risks
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.
- P4Technical Support Above Trend
Trip ifPrice falls below the 200-day moving average for 10 or more consecutive trading days, breaking technical support.