Cummins (CMI) Stock Forecast & Price Target

Cummins demonstrated robust financial performance across its business segments, with Power Systems sales increasing 18% to $1.996 billion, surpassing market expectations, and Distribution sales rising 7.5% to $3.172 billion, reflecting strong demand in North America. Additionally, the Accelera segment saw a 10% increase in sales, highlighting the growing trend towards e-mobility, while gross margins improved by 30 basis points year-over-year to 26.0%, despite a charge related to inventory. Cummins' joint venture income also showed positive momentum, rising by $5 million to $104 million, attributed to stronger performance in China’s Engine and Power Systems businesses, which supports a favorable outlook for the company’s future growth.

Cummins reported adjusted EBITDA of $292 million, slightly surpassing expectations, yet its adjusted EBITDA margin fell to 12.5%, reflecting a year-over-year decline attributable to weaker North American on-highway demand. The company's components segment experienced a 15% year-over-year sales decline, primarily due to declining on-highway demand in North America, while a significant entity-level goodwill impairment further strained overall profitability. Looking ahead, Cummins anticipates persistent weakness in on-highway truck markets, projecting approximately a 15% sequential decline in unit shipments, with light-duty vehicles expected to face a steep reduction of 25-30%.