Key Stats for Cummins Stock
- 52-Week Range: $260 to $618
- Current Price: $549.7
- Street High Target: $
What Happened?
Cummins (CMI) delivered record adjusted profitability in fiscal 2025 despite a 30% collapse in North America heavy and medium-duty truck volumes, with its Power Systems segment, which manufactures diesel generator sets for data centers and critical facilities, posting a record 22.7% EBITDA margin and driving total data center revenue to $3.5B for the year.
The sharpest trigger came February 5 on the Q4 2025 earnings report, where the company confirmed a doubling of its 95-liter high-speed diesel engine capacity, the core product powering data center backup generator sets, completed ahead of schedule, alongside record Q4 order intake that extended the backlog well into 2028.
Power Systems revenue hit a record $7.5B in 2025, up 16% year-over-year, with EBITDA expanding 430 basis points to 22.7%, a margin profile that significantly outpaces the company’s own Engine segment at 12.7% and validates the structural shift in Cummins’ earnings mix toward high-margin power generation.
Cummins simultaneously curtailed losses in its Accelera clean-energy segment by exiting future electrolyzer commercial activity, selling its hydrogen fuel cell rail operations to Alstom SA on April 2, and guiding Accelera’s net loss down to $325M-$355M in 2026 from $438M in 2025, sharpening the company’s capital focus toward higher-return businesses.
CEO Jennifer Rumsey stated on the Q4 2025 earnings call that “we’re taking orders now well into 2028; the demand remains very strong for diesel backup power,” directly anchoring the company’s 2026 Power Systems revenue guidance of up 12% to 17% with an EBITDA margin target of 23% to 24%.
Cummins’ forward setup combines three reinforcing catalysts: Power Systems expanding into its next capacity tranche with further detail expected at the May 21 Analyst Day in New York, the EPA 2027 low-NOx engine standard confirmed at 35 milligrams driving an estimated $10,000-$15,000 per-truck price increase split roughly two-thirds into the Engine segment and one-third into Components, and $3.5B in 2025 data center revenue positioned to grow 10% to 20% in 2026 as the company converts its supply-constrained backlog into earnings.
Wall Street’s Take on CMI Stock
The record $7.5B in Power Systems revenue and the $3.5B in data center sales already introduced anchor a durable margin expansion story, with TIKR consensus projecting EBITDA margins expanding from 17.4% in 2025 to 17.8% in 2026 as Power Systems grows 12% to 17%.
TIKR estimates CMI’s normalized EPS reaching $26.32 in 2026 and $31.46 in 2027, growth directly supported by the EPA 2027 platform launch adding an estimated $10,000 to $15,000 in per-truck content split roughly two-thirds into the Engine segment and one-third into Components.
Twelve analysts carry buy or outperform ratings against 11 holds and zero sells, with a Street mean price target of $619.92 representing 12.8% upside to the current $549.68, as consensus anticipates the H2 2026 North America truck recovery and continued Power Systems strength to drive earnings acceleration.
The spread between the Street’s $703 high target and $490 low reflects a binary on truck cycle timing: the high case assumes a meaningful EPA 2027 prebuy materializes in H2 2026, while the low case prices in a slower recovery and sustained tariff margin pressure already flagged by management.
What Does the Valuation Model Say?
The TIKR mid-case model targets $720.77 by December 2030, implying a 5.9% annualized IRR, anchored by a 7.0% revenue CAGR to $47.69B and EBITDA margin expansion to 20.8%, driven by Power Systems mix shift and shrinking Accelera losses as the electrolyzer exit reduces the segment’s annual drag toward $325M to $355M.
At roughly 12.6x forward EV/EBITDA on 2026 estimates, Cummins trades below its own historical upcycle range of 14x to 16x, despite a margin profile expanding toward 20.8% by 2030 and free cash flow growing from $2.39B in 2025 to an estimated $2.98B in 2026, leaving Cummins undervalued against the trajectory the business is already delivering.
The Alstom hydrogen fuel cell sale on April 2 directly validates the model’s assumption that Accelera losses decline sharply, removing a capital drag and redirecting management focus toward the Power Systems capacity investments that underpin the margin expansion forecast.
Management’s confirmation on the Q4 call that orders extend well into 2028 at record intake levels signals this is a structural demand shift, not a cyclical spike, the distinction the Street’s 11 hold ratings have not yet fully priced in.
The single risk is a sustained stall in the North America truck market recovery, which would compress Engine segment EBITDA below the 12% to 13% guided range and slow the EPS acceleration that justifies the current multiple re-rating.
The May 21 Analyst Day in New York is the pivotal catalyst, where updated 2030 financial targets and the next Power Systems capacity tranche announcement will confirm whether the 20.8% EBITDA margin trajectory embedded in the TIKR model is on track.
Should You Invest in Cummins Inc.?
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