E Cummins - A Fair Value Report

This report is about Cummins, Inc. (CMI) and covers the company’s fiscal year ended December 31, 2020. Listed earnings and metrics utilizing earnings are for that specific 12 month time period unless otherwise noted. Unaudited or reviewed financial information is not a part of, nor included in, this report.

Wire, Copper, Electric, Stop, Closeup, Metal, Recycling

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What They Do

Cummins designs manufacture distributes and services diesel and natural gas engines and engine-related component products, including filtration, after treatment, turbochargers, fuel systems, controls systems, air handling systems and electric power generation systems. Listed competitors include Navistar International (NYSE: NAV) and Caterpillar Inc. (NYSE: CAT).


Short-Term Target

My current short-term target for the stock is $258.94 with an initial trailing stop set at $246.35. Based on a recent price of $250.10, the upward price movement will find resistance at $260.83 and again at $270.95, with final resistance found at $276.06. Downward price movement will find support at $245.46 and again at $240.24, with final support found at $231.40.


One-Year Growth Price Target

My one-year growth price target is actually a price target range, determined by adding year over a year earning growth to the prior year's annual dividend yield and dividing the result by the current annual price to earnings ratio.

For this stock, my current one-year growth price target range is $242-$286.


Volatility Adjustment

There are different metrics available to help investors determine the volatility of a particular stock as compared to the volatility of the market as a whole. To me, the beta ratio is the metric that is the most representative of a stock’s volatility. A beta ratio of less than 1 means that the security’s price will be less volatile than the market, while a beta ratio greater than 1 indicates that the security’s price will be more volatile than the market.

Basis my current beta ratio for this stock of 1.08, my volatility adjustment to recent pricing is $19 per share, making my current volatility adjusted price $232.

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Financial statement data was obtained from the company’s most recent Annual Report on ...

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Krypto King 3 months ago Member's comment

Good read, thanks.