Cummins Stock Could Pullback On Limited Upside

Nov. 28, 2022 11:49 PM ETCummins Inc. (CMI)14 Comments
Prasanna Rajagopal profile picture
Prasanna Rajagopal
950 Followers

Summary

  • Strong revenue growth is driven by strength in the cyclical truck market.
  • High inventory levels may further impact profit margins.
  • Safe dividend but offers a low yield compared to the 10-year US Treasury.
  • Keep an eye on the New Power segment to assess the market adoption of hydrogen.

Engines on the exposition

Tramino

I rated Cummins (NYSE:CMI) a long-term buy in my article published on June 6, 2022. The stock was trading at $210.83 at that time. Since then, the stock has returned 20.5%, while the S&P 500 Index (

Cummins Quarterly Revenue by Segment [Q1 2021 - Q3 2022]

Cummins Quarterly Revenue by Segment [Q1 2021 - Q3 2022] (Cummins Investor Presentations, Author Compilation)

Cummins Five-year Average Dividend Growth, Payout Ratio, Dividend Coverage, and Yield

Cummins Five-year Average Dividend Growth, Payout Ratio, Dividend Coverage, and Yield (Seeking Alpha, Author Calculation)

Cummins Monthly Returns - Average, First Quartile, Third Quartile, and Standard Deviation

Cummins Monthly Returns - Average, First Quartile, Third Quartile, and Standard Deviation (Data Provided by IEX Cloud, Author Calculations)

Vanguard S&P 500 Index ETF (<a href='https://seekingalpha.com/symbol/VOO' title='Vanguard S&P 500 ETF'>VOO</a>) Monthly Returns - Average, First Quartile, Third Quartile, and Standard Deviation

Vanguard S&P 500 Index ETF (VOO) Monthly Returns - Average, First Quartile, Third Quartile, and Standard Deviation (Data Provided by IEX Cloud, Author Calculations)

The Formula for Days Sales in Inventory

The Formula for Days Sales in Inventory (Refinitiv)

Cummins Days Sales in Inventory [FY 2012-Q3 FY 2022]

Cummins Days Sales in Inventory [FY 2012-Q3 FY 2022] (Seeking Alpha, Author Calculations)

This article was written by

Prasanna Rajagopal profile picture
950 Followers
Prasanna Rajagopal comes with in-depth knowledge of the technology industry, having spent over 15 years in various sectors of the software industry. Prasanna loves to learn and write about business and investment opportunities in technology, media, retail, and industrial companies. Prasanna has a M.B.A. from UCLA Anderson School of Management, a M.S. in Industrial Engineering from Wichita State University and a Bachelor's degree in Mechanical Engineering from University of Madras.

Disclosure: I/we have a beneficial long position in the shares of CMI, VOO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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