Buffett Brain · Research note
Score updated 23 Oct 2026 · analysis from 22 Sept 2026
CMI· Industrials
Cummins
Cummins' 11% ROIC and 25% gross margin suggest a weak moat, with valuation at a P/E of 33.8 pricing in too much growth.
Buffett fit
Weak fit
Owner
31
Durability
58
Management
76
Price
11
Score updated 23 Oct 2026 · analysis from 22 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Industrials stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning 100% of Cummins would mean managing a capital-intensive business with a 5-year revenue CAGR of 8.81% and a net margin of 7.89%.
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Cummins has been profitable for the past five years, but its EPS saw a maximum decline of 65.86%, indicating vulnerability to economic cycles.
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Management has reduced the share count by 1.18% annually over the past five years, which is a positive sign of .
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The current of 33.8 and yield of 2.64% indicate a high valuation.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1Revenue of $33.67B with a net income of $2.84B indicates substantial scale.
- 2 of 23.77% over 5 years, showing management's ability to generate returns on equity.
- 3Interest coverage of 11.6, suggesting strong ability to meet debt obligations.
- 45-year profitable track record, indicating resilience in various market conditions.
Concerns
5- 1 of 33.8 implies high growth expectations not supported by 5-year EPS CAGR of 8.75%.
- 2 of 25.39% is below the sector's top quintile cutoff of 43.4%.
- 3 of 11.07% is below the sector's top quintile, indicating a weak competitive position.
- 4EPS max decline of 65.86% in the past 5 years highlights vulnerability to economic downturns.
Price history
$520+116.6%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Cummins Inc. designs, manufactures, and services diesel and natural gas engines, with five segments including Engine, Distribution, and Components. It generates $33.67B in revenue, with a net income of $2.84B. Its stands at 11.24%, indicating moderate profitability. The unit economics reflect a business that requires substantial capital to maintain its competitive position.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 23, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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