Key Stats for Cummins Stock
- Past-6-Month Performance: 50%
- 52-Week Range: $260 to $618
- Valuation Model Target Price: $697
- Implied Upside: 17.5%
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What Happened?
Cummins stock shares have surged about 50% in the last six months, recently trading near $593 and approaching the $618 52 week high as investors rotated into companies with strong data center exposure and durable earnings profiles.
The stock moved higher primarily because investors gained confidence that power generation growth can offset weakness in North America truck markets.
Record profitability in Power Systems, expanding margins, and multi-year visibility into data center demand reduced concerns that the 30% decline in heavy and medium duty truck engine volumes would significantly pressure earnings.
This week, Cummins reported Q4 revenue of $8.5 billion, up 1% year over year, with EBITDA of $1.2 billion or 13.5% of sales. Excluding $218 million in electrolyzer-related charges, EBITDA was $1.4 billion or 16%, as strong global power generation demand and higher pickup truck volumes offset truck softness.
CEO Jennifer Rumsey said the company “delivered strong financial performance despite weak demand in North America truck markets,” and full-year underlying EBITDA reached a record $5.8 billion or 17.4% of sales.
Power Systems was the key driver. Full-year 2025 revenue rose 16% to a record $7.5 billion, with EBITDA margins of 22.7%, supported by strong data center demand.
Total data center revenue reached about $3.5 billion, and management noted record power generation order intake in Q4 with orders extending well into 2028, providing multi-year visibility.
For 2026, management guided total company revenue growth of 3% to 8% and EBITDA margins of 17% to 18%, while Power Systems revenue is expected to rise 12% to 17% with margins of 23% to 24%.
Institutional positioning has also reinforced confidence in the stock. Vanguard increased its stake to 17,648,231 shares, representing about 12.8% of the company and roughly $7.45 billion in value.
State of New Jersey Common Pension Fund D boosted its position by 5.6%, Aberdeen Group raised its stake by 5.2%, and HighTower Advisors increased its holdings by 3.5%.
While LSV Asset Management reduced its stake by 24.5% and ING Groep NV trimmed exposure by 35.8%, overall institutional ownership remains elevated at approximately 83.46%, signaling sustained long-term conviction.
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Is Cummins Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 7.2%
- Operating Margins: 15.1%
- Exit P/E Multiple: 18x
Revenue declined 1% in 2025 to approximately $33.7 billion as weaker North America heavy and medium duty truck demand offset strength in power generation.
Analyst estimates project revenue rising to about $35.7 billion in 2026, representing nearly 6% growth, followed by continued mid to high single digit expansion through 2028 as sales move into the low $40 billion range.
Growth is increasingly supported by higher margin segments. Power Systems delivered record 22.7% EBITDA margins in 2025 and is guided to expand margins to 23% to 24% in 2026.
Distribution revenue rose 9% in 2025 to a record $12.4 billion with margins of 14.6%, and management expects revenue growth of 5% to 10% in 2026 alongside aftermarket growth of 2% to 8%.
This mix shift toward power generation, data center demand, and aftermarket services supports earnings durability even if truck markets recover gradually.
As capacity expansions and operational efficiency improvements flow through, consolidated margins could trend toward the modeled 15.1% level.
Based on these inputs, the valuation model estimates a target price of $697, implying about 17.5% total upside from the current price near $593 over roughly 2.9 years, or approximately 5.8% annualized returns.
At current levels, Cummins appears undervalued, with 2026 performance likely driven by continued power generation strength, margin expansion, and disciplined execution rather than a sharp rebound in truck volumes.
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