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Cummins (CMI): Valuation Check After $500 Million U.S. Army Deal and Recent Analyst Upgrades

Simply Wall St · 3d ago

Cummins (CMI) just locked in a $500 million contract with the U.S. Army for mobile power generators, a deal that reinforces its core power systems franchise and gives investors a fresh earnings catalyst.

See our latest analysis for Cummins.

The Army deal lands after a run of upbeat developments, including recent analyst upgrades, and helps extend what has already been a powerful move, with Cummins delivering a roughly mid-20s three-month share price return and a strong triple-digit three-year total shareholder return that signals momentum is still very much intact.

If this contract has you thinking about the broader defense supply chain, it might be worth exploring other aerospace and defense stocks that could benefit from similar long-term spending trends.

With shares near record highs after hefty gains and analysts nudging targets upward, is Cummins still trading at a discount to its true earnings power, or has the market already priced in the next leg of growth?

Most Popular Narrative: 2.2% Undervalued

With Cummins last closing at $510.05 against a narrative fair value near $522, the market is seen trailing its long term earnings potential.

The fair value estimate has risen slightly to approximately $522 from about $510, reflecting modestly higher long term earnings expectations.

The future P/E has moved up slightly to roughly 20.0x from about 19.7x, pointing to a small expansion in the valuation multiple applied to forward earnings.

Read the complete narrative.

Want to see what is driving that higher earnings power story? The narrative leans on rising margins, steadier growth, and a richer future multiple. Curious which assumptions really move the needle and how far profits might stretch under this view? Dive in to see the full blueprint behind that upgraded fair value.

Result: Fair Value of $521.57 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained North American truck weakness and slower progress in zero emission technologies could easily derail those higher margin and earnings assumptions.

Find out about the key risks to this Cummins narrative.

Another Angle on Value

On earnings, Cummins is no obvious bargain, with a 26.4x P/E that sits above both the US Machinery industry at 26x and peer average of 23.9x. Yet our fair ratio points to 35.1x, which hints the market could still re rate the stock. Which signal do you trust more?

See what the numbers say about this price — find out in our valuation breakdown.

NYSE:CMI PE Ratio as at Dec 2025
NYSE:CMI PE Ratio as at Dec 2025

Build Your Own Cummins Narrative

If you see the story differently, or simply want to stress test the assumptions with your own inputs, you can build a complete narrative in minutes: Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Cummins.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.