DCF Tool

CMI

Cummins Inc. – Other Engine Equipment Manufacturing
Cummins Inc., a global power leader, is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company's products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, batteries, electrified power systems, hydrogen generation and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 57,825 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $1.8 billion on sales of $19.8 billion in 2020.
Analysis Results
Intrinsic Value $441.16
Latest Price $203.17
Relative Value 54% undervalued
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Cash Flow (Billions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 7.4%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 6.5%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 7.4%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2022 2.45 2.3
2023 2.64 2.32
2024 2.83 2.34
2025 3.04 2.36
2026 3.27 2.38
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 73.7 billion. This corresponds to a present value of 50.5 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 11.7 billion. Adding in the terminal value gives a total present value of 62.2 billion.

There are presently 141.0 million outstanding shares, so the intrinsic value per share is 441.16.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 24,618,000,000
Current Cash 6,374,000,000
Current Liabilities 14,168,000,000
Current Debt 1,160,000,000
Non-Cash Working Capital (NCWC) 5,236,000,000
Change in NCWC 2,982,000,000
EBIT 5,440,000,000
Tax Provision 1,174,000,000
Depreciation and Amortization 1,324,000,000
Capital Expenditure -1,572,000,000
Unlevered Free Cash Flow 7,013,229,371
Current Assets 11,897,000,000
Current Cash 3,862,000,000
Current Liabilities 6,335,000,000
Current Debt 554,000,000
Non-Cash Working Capital (NCWC) 2,254,000,000
Change in NCWC -194,000,000
EBIT 2,299,000,000
Tax Provision 527,000,000
Depreciation and Amortization 673,000,000
Capital Expenditure -575,000,000
Unlevered Free Cash Flow 1,684,790,846
Current Assets 9,387,000,000
Current Cash 1,470,000,000
Current Liabilities 6,260,000,000
Current Debt 791,000,000
Non-Cash Working Capital (NCWC) 2,448,000,000
Change in NCWC -340,000,000
EBIT 2,843,000,000
Tax Provision 566,000,000
Depreciation and Amortization 672,000,000
Capital Expenditure -775,000,000
Unlevered Free Cash Flow 1,832,202,540
Current Assets 9,818,000,000
Current Cash 1,525,000,000
Current Liabilities 6,384,000,000
Current Debt 879,000,000
Non-Cash Working Capital (NCWC) 2,788,000,000
Change in NCWC 686,000,000
EBIT 2,810,000,000
Tax Provision 566,000,000
Depreciation and Amortization 611,000,000
Capital Expenditure -784,000,000
Unlevered Free Cash Flow 2,745,281,147
Current Assets 8,928,000,000
Current Cash 1,567,000,000
Current Liabilities 5,677,000,000
Current Debt 418,000,000
Non-Cash Working Capital (NCWC) 2,102,000,000
Change in NCWC -188,000,000
EBIT 2,343,000,000
Tax Provision 1,371,000,000
Depreciation and Amortization 583,000,000
Capital Expenditure -587,000,000
Unlevered Free Cash Flow 792,753,488
Current Assets 7,707,000,000
Current Cash 1,380,000,000
Current Liabilities 4,325,000,000
Current Debt 288,000,000
Non-Cash Working Capital (NCWC) 2,290,000,000
Change in NCWC -106,000,000
EBIT 2,090,000,000
Tax Provision 474,000,000
Depreciation and Amortization 530,000,000
Capital Expenditure -594,000,000
Unlevered Free Cash Flow 1,406,704,663
Current Assets 7,947,000,000
Current Cash 1,811,000,000
Current Liabilities 3,803,000,000
Current Debt 63,000,000
Non-Cash Working Capital (NCWC) 2,396,000,000
Change in NCWC -353,000,000
EBIT 2,417,000,000
Tax Provision 555,000,000
Depreciation and Amortization 514,000,000
Capital Expenditure -799,000,000
Unlevered Free Cash Flow 1,115,580,118
Current Assets 9,055,000,000
Current Cash 2,394,000,000
Current Liabilities 4,021,000,000
Current Debt 109,000,000
Non-Cash Working Capital (NCWC) 2,749,000,000
Change in NCWC 259,000,000
EBIT 2,326,000,000
Tax Provision 698,000,000
Depreciation and Amortization 455,000,000
Capital Expenditure -798,000,000
Unlevered Free Cash Flow 1,574,971,240
Current Assets 8,639,000,000
Current Cash 2,849,000,000
Current Liabilities 3,368,000,000
Current Debt 68,000,000
Non-Cash Working Capital (NCWC) 2,490,000,000
Change in NCWC -2,000,000
EBIT 2,100,000,000
Tax Provision 531,000,000
Depreciation and Amortization 407,000,000
Capital Expenditure -740,000,000
Unlevered Free Cash Flow 1,238,761,208
Current Assets 7,167,000,000
Current Cash 1,616,000,000
Current Liabilities 3,136,000,000
Current Debt 77,000,000
Non-Cash Working Capital (NCWC) 2,492,000,000
Change in NCWC 791,000,000
EBIT 2,256,000,000
Tax Provision 533,000,000
Depreciation and Amortization 361,000,000
Capital Expenditure -777,000,000
Unlevered Free Cash Flow 2,101,520,475

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