Cummins (CMI) Stock Forecast & Price Target

Cummins is forecasting sales growth of 3-8% for FY2026, translating to projected revenues between $34.680 billion and $36.364 billion, underpinned by robust demand in global power generation markets and improved pricing strategies. The company's Power Systems segment demonstrated a significant 18% year-over-year sales increase to $1.996 billion, driven primarily by heightened demand in data center applications, while Distribution sales rose 7.5% to $3.172 billion, bolstered by increased power generation product sales in North America. Additionally, adjusted earnings per share saw a 12.5% year-over-year rise that surpassed consensus estimates, reflecting the company's strong operational performance amidst varied market conditions.

Cummins has experienced a decline in gross margins, which decreased by 120 basis points year-over-year to 22.9%, largely due to lower North American truck volumes and the impacts of tariffs, despite some positive factors in power generation demand. The company's adjusted EBITDA figures reveal a troubling trend, with significant year-over-year decreases attributed to weak North American heavy-duty truck volumes, costs related to new engine platform investments, and underwhelming aftermarket sales. Furthermore, predictions indicate a potential decline in revenues from joint ventures in China amid soft demand for heavy- and medium-duty trucks, exacerbating the negative outlook for Cummins in an uncertain global market.