Intrinsic value of Cummins Inc. - CMI

Previous Close

$154.90

  Intrinsic Value

$238.72

stock screener

  Rating & Target

str. buy

+54%

Previous close

$154.90

 
Intrinsic value

$238.72

 
Up/down potential

+54%

 
Rating

str. buy

We calculate the intrinsic value of CMI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 24.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.90
  11.21
  10.59
  10.03
  9.53
  9.07
  8.67
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
Revenue, $m
  26,600
  29,582
  32,714
  35,995
  39,425
  43,002
  46,729
  50,608
  54,641
  58,834
  63,191
  67,719
  72,425
  77,316
  82,402
  87,693
  93,199
  98,931
  104,902
  111,125
  117,614
  124,382
  131,447
  138,823
  146,528
  154,580
  162,999
  171,802
  181,013
  190,652
Variable operating expenses, $m
  23,650
  26,278
  29,039
  31,931
  34,954
  38,107
  41,392
  44,811
  48,366
  52,062
  55,699
  59,690
  63,838
  68,149
  72,633
  77,296
  82,149
  87,202
  92,465
  97,950
  103,669
  109,636
  115,862
  122,364
  129,156
  136,253
  143,673
  151,433
  159,552
  168,048
Fixed operating expenses, $m
  180
  184
  188
  192
  196
  201
  205
  209
  214
  219
  224
  229
  234
  239
  244
  249
  255
  260
  266
  272
  278
  284
  290
  297
  303
  310
  317
  324
  331
  338
Total operating expenses, $m
  23,830
  26,462
  29,227
  32,123
  35,150
  38,308
  41,597
  45,020
  48,580
  52,281
  55,923
  59,919
  64,072
  68,388
  72,877
  77,545
  82,404
  87,462
  92,731
  98,222
  103,947
  109,920
  116,152
  122,661
  129,459
  136,563
  143,990
  151,757
  159,883
  168,386
Operating income, $m
  2,770
  3,120
  3,487
  3,872
  4,274
  4,694
  5,132
  5,587
  6,061
  6,553
  7,268
  7,800
  8,353
  8,928
  9,526
  10,148
  10,795
  11,469
  12,171
  12,903
  13,666
  14,463
  15,294
  16,162
  17,069
  18,017
  19,009
  20,045
  21,130
  22,266
EBITDA, $m
  3,543
  3,957
  4,391
  4,846
  5,322
  5,819
  6,336
  6,874
  7,434
  8,016
  8,622
  9,250
  9,904
  10,584
  11,290
  12,026
  12,791
  13,588
  14,418
  15,283
  16,185
  17,126
  18,109
  19,135
  20,207
  21,327
  22,499
  23,724
  25,006
  26,348
Interest expense (income), $m
  68
  134
  210
  289
  372
  460
  551
  646
  746
  849
  956
  1,068
  1,184
  1,305
  1,430
  1,560
  1,696
  1,837
  1,983
  2,136
  2,295
  2,461
  2,633
  2,814
  3,002
  3,198
  3,403
  3,618
  3,842
  4,077
  4,322
Earnings before tax, $m
  2,637
  2,910
  3,198
  3,500
  3,815
  4,143
  4,485
  4,841
  5,212
  5,597
  6,200
  6,616
  7,049
  7,498
  7,966
  8,452
  8,958
  9,486
  10,035
  10,608
  11,206
  11,829
  12,480
  13,160
  13,871
  14,614
  15,391
  16,203
  17,054
  17,944
Tax expense, $m
  712
  786
  864
  945
  1,030
  1,119
  1,211
  1,307
  1,407
  1,511
  1,674
  1,786
  1,903
  2,024
  2,151
  2,282
  2,419
  2,561
  2,710
  2,864
  3,026
  3,194
  3,370
  3,553
  3,745
  3,946
  4,155
  4,375
  4,604
  4,845
Net income, $m
  1,925
  2,125
  2,335
  2,555
  2,785
  3,025
  3,274
  3,534
  3,805
  4,086
  4,526
  4,830
  5,145
  5,474
  5,815
  6,170
  6,540
  6,925
  7,326
  7,744
  8,180
  8,635
  9,111
  9,607
  10,126
  10,668
  11,235
  11,828
  12,449
  13,099

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  21,331
  23,722
  26,234
  28,865
  31,615
  34,484
  37,473
  40,584
  43,818
  47,180
  50,674
  54,305
  58,079
  62,002
  66,080
  70,323
  74,738
  79,335
  84,124
  89,114
  94,317
  99,745
  105,410
  111,326
  117,505
  123,962
  130,713
  137,773
  145,159
  152,888
Adjusted assets (=assets-cash), $m
  21,331
  23,722
  26,234
  28,865
  31,615
  34,484
  37,473
  40,584
  43,818
  47,180
  50,674
  54,305
  58,079
  62,002
  66,080
  70,323
  74,738
  79,335
  84,124
  89,114
  94,317
  99,745
  105,410
  111,326
  117,505
  123,962
  130,713
  137,773
  145,159
  152,888
Revenue / Adjusted assets
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
  1.247
Average production assets, $m
  5,639
  6,271
  6,935
  7,631
  8,358
  9,116
  9,907
  10,729
  11,584
  12,473
  13,397
  14,356
  15,354
  16,391
  17,469
  18,591
  19,758
  20,973
  22,239
  23,559
  24,934
  26,369
  27,867
  29,430
  31,064
  32,771
  34,556
  36,422
  38,375
  40,418
Working capital, $m
  3,112
  3,461
  3,828
  4,211
  4,613
  5,031
  5,467
  5,921
  6,393
  6,884
  7,393
  7,923
  8,474
  9,046
  9,641
  10,260
  10,904
  11,575
  12,274
  13,002
  13,761
  14,553
  15,379
  16,242
  17,144
  18,086
  19,071
  20,101
  21,179
  22,306
Total debt, $m
  3,881
  5,351
  6,896
  8,514
  10,206
  11,970
  13,808
  15,721
  17,710
  19,778
  21,927
  24,160
  26,481
  28,893
  31,401
  34,011
  36,726
  39,553
  42,498
  45,567
  48,767
  52,105
  55,589
  59,227
  63,027
  66,999
  71,150
  75,492
  80,035
  84,788
Total liabilities, $m
  13,119
  14,589
  16,134
  17,752
  19,444
  21,208
  23,046
  24,959
  26,948
  29,016
  31,165
  33,398
  35,719
  38,131
  40,639
  43,249
  45,964
  48,791
  51,736
  54,805
  58,005
  61,343
  64,827
  68,465
  72,265
  76,237
  80,388
  84,730
  89,273
  94,026
Total equity, $m
  8,212
  9,133
  10,100
  11,113
  12,172
  13,276
  14,427
  15,625
  16,870
  18,164
  19,510
  20,908
  22,360
  23,871
  25,441
  27,074
  28,774
  30,544
  32,388
  34,309
  36,312
  38,402
  40,583
  42,860
  45,239
  47,725
  50,324
  53,042
  55,886
  58,862
Total liabilities and equity, $m
  21,331
  23,722
  26,234
  28,865
  31,616
  34,484
  37,473
  40,584
  43,818
  47,180
  50,675
  54,306
  58,079
  62,002
  66,080
  70,323
  74,738
  79,335
  84,124
  89,114
  94,317
  99,745
  105,410
  111,325
  117,504
  123,962
  130,712
  137,772
  145,159
  152,888
Debt-to-equity ratio
  0.470
  0.590
  0.680
  0.770
  0.840
  0.900
  0.960
  1.010
  1.050
  1.090
  1.120
  1.160
  1.180
  1.210
  1.230
  1.260
  1.280
  1.290
  1.310
  1.330
  1.340
  1.360
  1.370
  1.380
  1.390
  1.400
  1.410
  1.420
  1.430
  1.440
Adjusted equity ratio
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,925
  2,125
  2,335
  2,555
  2,785
  3,025
  3,274
  3,534
  3,805
  4,086
  4,526
  4,830
  5,145
  5,474
  5,815
  6,170
  6,540
  6,925
  7,326
  7,744
  8,180
  8,635
  9,111
  9,607
  10,126
  10,668
  11,235
  11,828
  12,449
  13,099
Depreciation, amort., depletion, $m
  773
  837
  904
  974
  1,048
  1,124
  1,204
  1,287
  1,374
  1,463
  1,353
  1,450
  1,551
  1,656
  1,765
  1,878
  1,996
  2,119
  2,246
  2,380
  2,519
  2,664
  2,815
  2,973
  3,138
  3,310
  3,490
  3,679
  3,876
  4,083
Funds from operations, $m
  2,698
  2,962
  3,239
  3,529
  3,832
  4,149
  4,479
  4,822
  5,178
  5,549
  5,879
  6,280
  6,696
  7,129
  7,579
  8,048
  8,535
  9,043
  9,572
  10,124
  10,699
  11,299
  11,926
  12,580
  13,264
  13,978
  14,726
  15,507
  16,325
  17,182
Change in working capital, $m
  331
  349
  366
  384
  401
  419
  436
  454
  472
  491
  510
  530
  551
  572
  595
  619
  644
  671
  699
  728
  759
  792
  827
  863
  902
  942
  985
  1,030
  1,078
  1,128
Cash from operations, $m
  2,367
  2,613
  2,872
  3,145
  3,431
  3,730
  4,042
  4,368
  4,706
  5,058
  5,370
  5,750
  6,146
  6,557
  6,984
  7,429
  7,891
  8,372
  8,874
  9,396
  9,940
  10,507
  11,099
  11,717
  12,362
  13,036
  13,741
  14,477
  15,248
  16,054
Maintenance CAPEX, $m
  -508
  -570
  -633
  -701
  -771
  -844
  -921
  -1,001
  -1,084
  -1,170
  -1,260
  -1,353
  -1,450
  -1,551
  -1,656
  -1,765
  -1,878
  -1,996
  -2,119
  -2,246
  -2,380
  -2,519
  -2,664
  -2,815
  -2,973
  -3,138
  -3,310
  -3,490
  -3,679
  -3,876
New CAPEX, $m
  -605
  -632
  -664
  -696
  -727
  -758
  -790
  -822
  -855
  -889
  -924
  -960
  -998
  -1,037
  -1,078
  -1,122
  -1,167
  -1,215
  -1,266
  -1,319
  -1,376
  -1,435
  -1,498
  -1,564
  -1,634
  -1,707
  -1,785
  -1,866
  -1,953
  -2,043
Cash from investing activities, $m
  -1,113
  -1,202
  -1,297
  -1,397
  -1,498
  -1,602
  -1,711
  -1,823
  -1,939
  -2,059
  -2,184
  -2,313
  -2,448
  -2,588
  -2,734
  -2,887
  -3,045
  -3,211
  -3,385
  -3,565
  -3,756
  -3,954
  -4,162
  -4,379
  -4,607
  -4,845
  -5,095
  -5,356
  -5,632
  -5,919
Free cash flow, $m
  1,253
  1,411
  1,575
  1,749
  1,933
  2,128
  2,331
  2,545
  2,767
  3,000
  3,186
  3,437
  3,698
  3,969
  4,250
  4,543
  4,846
  5,161
  5,489
  5,830
  6,184
  6,554
  6,938
  7,338
  7,756
  8,191
  8,646
  9,120
  9,616
  10,134
Issuance/(repayment) of debt, $m
  1,405
  1,471
  1,545
  1,618
  1,691
  1,764
  1,838
  1,913
  1,989
  2,068
  2,149
  2,233
  2,321
  2,412
  2,508
  2,609
  2,715
  2,827
  2,945
  3,069
  3,200
  3,338
  3,484
  3,638
  3,800
  3,971
  4,152
  4,342
  4,542
  4,754
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,405
  1,471
  1,545
  1,618
  1,691
  1,764
  1,838
  1,913
  1,989
  2,068
  2,149
  2,233
  2,321
  2,412
  2,508
  2,609
  2,715
  2,827
  2,945
  3,069
  3,200
  3,338
  3,484
  3,638
  3,800
  3,971
  4,152
  4,342
  4,542
  4,754
Total cash flow (excl. dividends), $m
  2,658
  2,881
  3,120
  3,367
  3,625
  3,892
  4,170
  4,458
  4,757
  5,067
  5,335
  5,670
  6,019
  6,381
  6,759
  7,152
  7,561
  7,989
  8,434
  8,899
  9,384
  9,892
  10,422
  10,976
  11,556
  12,163
  12,798
  13,462
  14,159
  14,888
Retained Cash Flow (-), $m
  -864
  -921
  -967
  -1,013
  -1,059
  -1,105
  -1,151
  -1,197
  -1,245
  -1,294
  -1,345
  -1,398
  -1,453
  -1,510
  -1,570
  -1,633
  -1,700
  -1,770
  -1,844
  -1,921
  -2,003
  -2,090
  -2,181
  -2,277
  -2,379
  -2,486
  -2,599
  -2,718
  -2,844
  -2,976
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  1,793
  1,961
  2,152
  2,354
  2,566
  2,787
  3,019
  3,260
  3,511
  3,773
  3,990
  4,272
  4,566
  4,871
  5,188
  5,518
  5,862
  6,219
  6,590
  6,978
  7,381
  7,802
  8,241
  8,699
  9,177
  9,676
  10,198
  10,744
  11,315
  11,912
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  1,719
  1,795
  1,873
  1,938
  1,989
  2,023
  2,040
  2,038
  2,017
  1,978
  1,895
  1,823
  1,736
  1,635
  1,523
  1,402
  1,275
  1,145
  1,015
  887
  763
  647
  540
  443
  357
  282
  219
  166
  124
  90
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Cummins Inc. designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products. The Company's segments include Engine, Distribution, Components and Power Systems. The Engine segment manufactures and markets a range of diesel and natural gas powered engines under the Cummins brand name, as well as certain customer brand names, for the heavy and medium-duty truck, bus, recreational vehicle (RV), light-duty automotive and agricultural markets. The Distribution segment consists of the product lines, which service and/or distribute a range of products and services, including parts, engines, power generation and service. The Components segment supplies products, including aftertreatment systems, turbochargers, filtration products and fuel systems for commercial diesel applications. The Power Systems segment consists of businesses, including Power generation, Industrial and Generator technologies.

FINANCIAL RATIOS  of  Cummins Inc. (CMI)

Valuation Ratios
P/E Ratio 18.7
Price to Sales 1.5
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 13.5
Price to Free Cash Flow 19.4
Growth Rates
Sales Growth Rate -8.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25.7%
Cap. Spend. - 3 Yr. Gr. Rate -4.3%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 22.8%
Total Debt to Equity 27%
Interest Coverage 29
Management Effectiveness
Return On Assets 9.6%
Ret/ On Assets - 3 Yr. Avg. 12%
Return On Total Capital 15.7%
Ret/ On T. Cap. - 3 Yr. Avg. 16.2%
Return On Equity 19.5%
Return On Equity - 3 Yr. Avg. 19.9%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 25.4%
Gross Margin - 3 Yr. Avg. 25.5%
EBITDA Margin 14.4%
EBITDA Margin - 3 Yr. Avg. 16.7%
Operating Margin 11%
Oper. Margin - 3 Yr. Avg. 11.4%
Pre-Tax Margin 11%
Pre-Tax Margin - 3 Yr. Avg. 11.4%
Net Profit Margin 8%
Net Profit Margin - 3 Yr. Avg. 8%
Effective Tax Rate 24.6%
Eff/ Tax Rate - 3 Yr. Avg. 26.9%
Payout Ratio 48.5%

CMI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CMI stock intrinsic value calculation we used $23771 million for the last fiscal year's total revenue generated by Cummins Inc.. The default revenue input number comes from 0001 income statement of Cummins Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CMI stock valuation model: a) initial revenue growth rate of 11.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for CMI is calculated based on our internal credit rating of Cummins Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Cummins Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CMI stock the variable cost ratio is equal to 89%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $176 million in the base year in the intrinsic value calculation for CMI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Cummins Inc..

Corporate tax rate of 27% is the nominal tax rate for Cummins Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CMI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CMI are equal to 21.2%.

Life of production assets of 9.9 years is the average useful life of capital assets used in Cummins Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CMI is equal to 11.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $7348 million for Cummins Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 157.360 million for Cummins Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Cummins Inc. at the current share price and the inputted number of shares is $24.4 billion.

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