Intrinsic value of Cummins - CMI

Previous Close

$135.81

  Intrinsic Value

$301.74

stock screener

  Rating & Target

str. buy

+122%

Previous close

$135.81

 
Intrinsic value

$301.74

 
Up/down potential

+122%

 
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 2017), $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 22.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.70
  15.53
  14.48
  13.53
  12.68
  11.91
  11.22
  10.60
  10.04
  9.53
  9.08
  8.67
  8.30
  7.97
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
Revenue, $m
  23,839
  27,542
  31,529
  35,795
  40,332
  45,135
  50,198
  55,517
  61,089
  66,913
  72,988
  79,317
  85,904
  92,754
  99,875
  107,274
  114,964
  122,955
  131,262
  139,900
  148,885
  158,235
  167,970
  178,110
  188,678
  199,697
  211,191
  223,188
  235,714
  248,798
Variable operating expenses, $m
  20,563
  23,725
  27,129
  30,772
  34,647
  38,748
  43,072
  47,614
  52,372
  57,345
  62,328
  67,732
  73,357
  79,207
  85,287
  91,606
  98,172
  104,996
  112,090
  119,466
  127,139
  135,123
  143,436
  152,096
  161,120
  170,529
  180,345
  190,589
  201,285
  212,459
Fixed operating expenses, $m
  730
  746
  762
  779
  796
  814
  831
  850
  868
  888
  907
  927
  947
  968
  990
  1,011
  1,034
  1,056
  1,080
  1,103
  1,128
  1,152
  1,178
  1,204
  1,230
  1,257
  1,285
  1,313
  1,342
  1,372
Total operating expenses, $m
  21,293
  24,471
  27,891
  31,551
  35,443
  39,562
  43,903
  48,464
  53,240
  58,233
  63,235
  68,659
  74,304
  80,175
  86,277
  92,617
  99,206
  106,052
  113,170
  120,569
  128,267
  136,275
  144,614
  153,300
  162,350
  171,786
  181,630
  191,902
  202,627
  213,831
Operating income, $m
  2,547
  3,071
  3,637
  4,244
  4,889
  5,573
  6,295
  7,054
  7,849
  8,680
  9,754
  10,658
  11,600
  12,579
  13,598
  14,657
  15,758
  16,902
  18,093
  19,330
  20,618
  21,959
  23,356
  24,811
  26,328
  27,910
  29,562
  31,286
  33,086
  34,968
EBITDA, $m
  3,370
  3,990
  4,660
  5,376
  6,139
  6,948
  7,801
  8,697
  9,636
  10,619
  11,644
  12,712
  13,825
  14,982
  16,185
  17,435
  18,736
  20,087
  21,492
  22,954
  24,475
  26,058
  27,706
  29,424
  31,215
  33,083
  35,031
  37,066
  39,191
  41,412
Interest expense (income), $m
  68
  108
  206
  311
  425
  547
  677
  814
  959
  1,111
  1,270
  1,436
  1,610
  1,791
  1,979
  2,175
  2,378
  2,590
  2,810
  3,038
  3,275
  3,522
  3,779
  4,046
  4,324
  4,614
  4,916
  5,231
  5,559
  5,902
  6,260
Earnings before tax, $m
  2,438
  2,866
  3,326
  3,818
  4,342
  4,897
  5,481
  6,095
  6,738
  7,410
  8,317
  9,048
  9,809
  10,600
  11,423
  12,279
  13,168
  14,093
  15,055
  16,055
  17,096
  18,180
  19,310
  20,487
  21,714
  22,994
  24,331
  25,726
  27,184
  28,708
Tax expense, $m
  658
  774
  898
  1,031
  1,172
  1,322
  1,480
  1,646
  1,819
  2,001
  2,246
  2,443
  2,648
  2,862
  3,084
  3,315
  3,555
  3,805
  4,065
  4,335
  4,616
  4,909
  5,214
  5,531
  5,863
  6,208
  6,569
  6,946
  7,340
  7,751
Net income, $m
  1,780
  2,092
  2,428
  2,787
  3,170
  3,574
  4,001
  4,449
  4,919
  5,409
  6,071
  6,605
  7,160
  7,738
  8,339
  8,963
  9,613
  10,288
  10,990
  11,720
  12,480
  13,272
  14,096
  14,955
  15,851
  16,786
  17,761
  18,780
  19,844
  20,957

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
  21,097
  24,373
  27,902
  31,677
  35,692
  39,943
  44,423
  49,130
  54,061
  59,215
  64,591
  70,192
  76,022
  82,083
  88,385
  94,933
  101,738
  108,810
  116,161
  123,805
  131,757
  140,031
  148,646
  157,620
  166,972
  176,723
  186,895
  197,511
  208,596
  220,176
Adjusted assets (=assets-cash), $m
  21,097
  24,373
  27,902
  31,677
  35,692
  39,943
  44,423
  49,130
  54,061
  59,215
  64,591
  70,192
  76,022
  82,083
  88,385
  94,933
  101,738
  108,810
  116,161
  123,805
  131,757
  140,031
  148,646
  157,620
  166,972
  176,723
  186,895
  197,511
  208,596
  220,176
Revenue / Adjusted assets
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
Average production assets, $m
  6,174
  7,133
  8,166
  9,271
  10,446
  11,690
  13,001
  14,379
  15,822
  17,330
  18,904
  20,543
  22,249
  24,023
  25,868
  27,784
  29,776
  31,845
  33,997
  36,234
  38,561
  40,983
  43,504
  46,131
  48,868
  51,721
  54,699
  57,806
  61,050
  64,439
Working capital, $m
  691
  799
  914
  1,038
  1,170
  1,309
  1,456
  1,610
  1,772
  1,940
  2,117
  2,300
  2,491
  2,690
  2,896
  3,111
  3,334
  3,566
  3,807
  4,057
  4,318
  4,589
  4,871
  5,165
  5,472
  5,791
  6,125
  6,472
  6,836
  7,215
Total debt, $m
  3,806
  5,765
  7,875
  10,133
  12,534
  15,076
  17,755
  20,570
  23,519
  26,601
  29,816
  33,165
  36,651
  40,276
  44,044
  47,960
  52,029
  56,258
  60,654
  65,226
  69,980
  74,929
  80,080
  85,447
  91,039
  96,870
  102,953
  109,302
  115,931
  122,855
Total liabilities, $m
  12,616
  14,575
  16,685
  18,943
  21,344
  23,886
  26,565
  29,380
  32,329
  35,411
  38,626
  41,975
  45,461
  49,086
  52,854
  56,770
  60,839
  65,068
  69,464
  74,036
  78,790
  83,739
  88,890
  94,257
  99,849
  105,680
  111,763
  118,112
  124,741
  131,665
Total equity, $m
  8,481
  9,798
  11,216
  12,734
  14,348
  16,057
  17,858
  19,750
  21,733
  23,804
  25,966
  28,217
  30,561
  32,998
  35,531
  38,163
  40,899
  43,742
  46,697
  49,770
  52,966
  56,293
  59,756
  63,363
  67,123
  71,043
  75,132
  79,400
  83,856
  88,511
Total liabilities and equity, $m
  21,097
  24,373
  27,901
  31,677
  35,692
  39,943
  44,423
  49,130
  54,062
  59,215
  64,592
  70,192
  76,022
  82,084
  88,385
  94,933
  101,738
  108,810
  116,161
  123,806
  131,756
  140,032
  148,646
  157,620
  166,972
  176,723
  186,895
  197,512
  208,597
  220,176
Debt-to-equity ratio
  0.450
  0.590
  0.700
  0.800
  0.870
  0.940
  0.990
  1.040
  1.080
  1.120
  1.150
  1.180
  1.200
  1.220
  1.240
  1.260
  1.270
  1.290
  1.300
  1.310
  1.320
  1.330
  1.340
  1.350
  1.360
  1.360
  1.370
  1.380
  1.380
  1.390
Adjusted equity ratio
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,780
  2,092
  2,428
  2,787
  3,170
  3,574
  4,001
  4,449
  4,919
  5,409
  6,071
  6,605
  7,160
  7,738
  8,339
  8,963
  9,613
  10,288
  10,990
  11,720
  12,480
  13,272
  14,096
  14,955
  15,851
  16,786
  17,761
  18,780
  19,844
  20,957
Depreciation, amort., depletion, $m
  823
  919
  1,022
  1,133
  1,250
  1,374
  1,506
  1,643
  1,788
  1,939
  1,890
  2,054
  2,225
  2,402
  2,587
  2,778
  2,978
  3,185
  3,400
  3,623
  3,856
  4,098
  4,350
  4,613
  4,887
  5,172
  5,470
  5,781
  6,105
  6,444
Funds from operations, $m
  2,603
  3,011
  3,450
  3,920
  4,420
  4,949
  5,507
  6,093
  6,706
  7,348
  7,962
  8,659
  9,385
  10,141
  10,926
  11,742
  12,590
  13,472
  14,390
  15,344
  16,336
  17,370
  18,447
  19,568
  20,738
  21,958
  23,231
  24,561
  25,949
  27,400
Change in working capital, $m
  99
  107
  116
  124
  132
  139
  147
  154
  162
  169
  176
  184
  191
  199
  206
  215
  223
  232
  241
  250
  261
  271
  282
  294
  306
  320
  333
  348
  363
  379
Cash from operations, $m
  2,504
  2,904
  3,335
  3,796
  4,288
  4,810
  5,360
  5,938
  6,545
  7,179
  7,786
  8,476
  9,194
  9,942
  10,719
  11,527
  12,367
  13,241
  14,149
  15,093
  16,076
  17,099
  18,164
  19,274
  20,431
  21,638
  22,898
  24,213
  25,586
  27,021
Maintenance CAPEX, $m
  -530
  -617
  -713
  -817
  -927
  -1,045
  -1,169
  -1,300
  -1,438
  -1,582
  -1,733
  -1,890
  -2,054
  -2,225
  -2,402
  -2,587
  -2,778
  -2,978
  -3,185
  -3,400
  -3,623
  -3,856
  -4,098
  -4,350
  -4,613
  -4,887
  -5,172
  -5,470
  -5,781
  -6,105
New CAPEX, $m
  -877
  -959
  -1,033
  -1,105
  -1,175
  -1,244
  -1,311
  -1,378
  -1,443
  -1,508
  -1,574
  -1,639
  -1,706
  -1,774
  -1,844
  -1,917
  -1,992
  -2,070
  -2,152
  -2,237
  -2,327
  -2,422
  -2,521
  -2,626
  -2,737
  -2,854
  -2,977
  -3,107
  -3,244
  -3,389
Cash from investing activities, $m
  -1,407
  -1,576
  -1,746
  -1,922
  -2,102
  -2,289
  -2,480
  -2,678
  -2,881
  -3,090
  -3,307
  -3,529
  -3,760
  -3,999
  -4,246
  -4,504
  -4,770
  -5,048
  -5,337
  -5,637
  -5,950
  -6,278
  -6,619
  -6,976
  -7,350
  -7,741
  -8,149
  -8,577
  -9,025
  -9,494
Free cash flow, $m
  1,097
  1,327
  1,589
  1,875
  2,186
  2,521
  2,879
  3,261
  3,664
  4,089
  4,479
  4,946
  5,434
  5,943
  6,473
  7,024
  7,597
  8,193
  8,813
  9,456
  10,125
  10,821
  11,545
  12,298
  13,081
  13,898
  14,749
  15,636
  16,561
  17,527
Issuance/(repayment) of debt, $m
  1,800
  1,959
  2,110
  2,257
  2,401
  2,542
  2,679
  2,815
  2,949
  3,082
  3,215
  3,349
  3,486
  3,625
  3,768
  3,916
  4,069
  4,229
  4,396
  4,571
  4,755
  4,948
  5,152
  5,366
  5,592
  5,831
  6,083
  6,349
  6,629
  6,924
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  
  1,800
  1,959
  2,110
  2,257
  2,401
  2,542
  2,679
  2,815
  2,949
  3,082
  3,215
  3,349
  3,486
  3,625
  3,768
  3,916
  4,069
  4,229
  4,396
  4,571
  4,755
  4,948
  5,152
  5,366
  5,592
  5,831
  6,083
  6,349
  6,629
  6,924
Total cash flow (excl. dividends), $m
  2,897
  3,287
  3,699
  4,132
  4,587
  5,063
  5,559
  6,075
  6,612
  7,170
  7,694
  8,296
  8,920
  9,568
  10,241
  10,940
  11,667
  12,422
  13,209
  14,027
  14,880
  15,769
  16,696
  17,664
  18,674
  19,729
  20,832
  21,984
  23,190
  24,451
Retained Cash Flow (-), $m
  -1,222
  -1,317
  -1,418
  -1,518
  -1,614
  -1,709
  -1,801
  -1,892
  -1,982
  -2,072
  -2,161
  -2,252
  -2,343
  -2,437
  -2,533
  -2,632
  -2,736
  -2,843
  -2,955
  -3,073
  -3,196
  -3,326
  -3,463
  -3,607
  -3,760
  -3,920
  -4,089
  -4,268
  -4,456
  -4,655
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
  41
  48
  55
  63
  72
  81
  90
  100
  111
  122
  134
  146
  159
  172
  186
  200
  215
  230
  246
  263
  280
  298
  316
  336
  356
  377
  399
  422
  446
  471
Cash available for distribution, $m
  1,675
  1,969
  2,280
  2,615
  2,973
  3,354
  3,758
  4,183
  4,630
  5,099
  5,533
  6,044
  6,577
  7,131
  7,708
  8,307
  8,931
  9,579
  10,253
  10,954
  11,684
  12,443
  13,233
  14,056
  14,914
  15,809
  16,742
  17,717
  18,734
  19,797
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
  1,606
  1,803
  1,984
  2,153
  2,304
  2,434
  2,539
  2,615
  2,660
  2,673
  2,628
  2,579
  2,501
  2,394
  2,263
  2,111
  1,943
  1,764
  1,579
  1,392
  1,208
  1,032
  867
  716
  580
  461
  359
  274
  204
  149
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 (CMI)

Valuation Ratios
P/E Ratio 16.4
Price to Sales 1.3
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 11.8
Price to Free Cash Flow 17
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 $20428 million for the last fiscal year's total revenue generated by Cummins. The default revenue input number comes from 2017 income statement of Cummins. 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 16.7% 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, 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.
    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 86.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $714 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.

Corporate tax rate of 27% is the nominal tax rate for Cummins. 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 0.2%.

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 25.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Cummins 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 2.9%. 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 - $7259 million for Cummins - 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 166 million for Cummins 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 at the current share price and the inputted number of shares is $22.5 billion.

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COMPANY NEWS

▶ 7 S&P 500 Stocks With Low P/E Ratios   [Jul-11-18 10:37AM  InvestorPlace]
▶ Cummins Inc. Increases Quarterly Common Stock Dividend   [Jul-10-18 03:30PM  Business Wire]
▶ [$$] Cummins to Acquire Efficient Drivetrains   [Jul-02-18 08:03PM  The Wall Street Journal]
▶ Should You Bite on Eaton Corporation PLCs Yield?   [Jun-27-18 11:41PM  InvestorPlace]
▶ GE Nears Sale of Industrial Engines Unit for $3B   [Jun-25-18 06:07AM  Investopedia]
▶ Buffalo-area manufacturers optimistic despite obstacles to growth   [Jun-23-18 07:55AM  American City Business Journals]
▶ Here's Why Westport Fuel Systems Stock Rose 11.9% in May   [Jun-08-18 10:47AM  Motley Fool]
▶ Valvoline's Strong Brand Should Drive Returns   [May-30-18 07:00AM  Morningstar]
▶ Cummins Inc. Declares Quarterly Common Stock Dividend   [May-08-18 03:00PM  Business Wire]
▶ New Cummins plant manager becomes rare woman to run large WNY factory   [12:42PM  American City Business Journals]
▶ Seagate, Pfizer and Cummins skid while AbbVie jumps   [May-01-18 04:33PM  Associated Press]
▶ Cummins: 1Q Earnings Snapshot   [07:51AM  Associated Press]
▶ Industrials, tech see biggest intraday reversals   [Apr-24-18 03:39PM  CNBC Videos]
▶ Cummins Announces Availability of X12 With Autocar   [Apr-18-18 03:07PM  Business Wire]
▶ GE Rises on Potential Deal for Jenbacher Unit   [Apr-17-18 12:21PM  Barrons.com]
▶ [$$] Cummins Could Regain Its Highs   [Apr-14-18 12:01AM  Barrons.com]
▶ Calculating The Fair Value Of Cummins Inc (NYSE:CMI)   [Mar-25-18 07:48AM  Simply Wall St.]
▶ Time to Get Greedy With Trucking Stocks?   [07:16AM  Motley Fool]
▶ Today's Top Supply Chain and Logistics News From WSJ   [Mar-06-18 06:30AM  The Wall Street Journal]
▶ 4 Stocks for the Late Bull Market   [06:00AM  Investopedia]
▶ Cummins X12 Wins Heavy-Duty Truckings Top 20 Award for 2018   [Feb-16-18 02:30PM  Business Wire]
▶ Cummins Inc. Declares Quarterly Common Stock Dividend   [Feb-13-18 05:15PM  Business Wire]
▶ Dunkin' Brands, Centene, Cummins, Fidelity National Earnings Top Views   [Feb-06-18 04:03PM  Investor's Business Daily]
▶ Cummins reports 4Q loss   [07:47AM  Associated Press]
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