Is Cummins Inc (CMI) overvalued?
On Equity Rank's model estimate, CMI trades close to its fair value (0% below it). Cummins Inc (CMI) last closed at $450.07; the multi-method model fair value is $451.02.
| Price | Model fair value | Price vs model |
|---|---|---|
| $450.07 | $451.02 | 0% below |
What the answer rests on
- 0 of 9 valuation methods put CMI's value above its price and 9 put it below, so the methods mostly agree.
- To justify today's price, CMI's free cash flow would need to grow about 12.4% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 31.6% a year.
- CMI trades at 24.1 times its last year's earnings, against a median of 24.9 for 187 profitable Industrials companies.
- Over the past year the price sat below the model fair value on 52% of trading days. The gap ranged from 6% below to 53% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind CMI's fair value · What prices assume · Other companies