Cummins (CMI) Could Be 13% Undervalued After Record Q2 And Higher Guidance
Cummins (CMI) reported record second quarter 2026 results, with sales of US$9.46b and net income of US$932m, and raised its full year revenue growth guidance to a range of 10% to 13%.
See our latest analysis for Cummins.
Following these results and the raised guidance, Cummins shares have shown firm momentum, with a 7-day share price return of 7.30% and a year to date share price return of 24.56%. The 1-year total shareholder return of 73.09% and 5-year total shareholder return of 202.33% point to strong long term gains despite some recent price softness over the last quarter.
If this kind of earnings driven move has your attention, it could be a good moment to see what else is setting up in power and grid related plays through our 36 power grid technology and infrastructure stocks
After Cummins' sharp move and the fresh guidance, the share price now sits between a higher analyst target and a smaller estimated intrinsic value gap. So where does fair value really look anchored as the dust settles?
Most Popular Narrative: 13.2% Undervalued
Against a last close of $650.25, the most followed Cummins narrative indicates a fair value of $748.81, which points to a meaningful valuation gap and places more emphasis on the earnings and power demand story behind that number.
Cummins is experiencing strong and steadily growing demand for power generation equipment, especially from the data center sector, driven by increasing urbanization, digital infrastructure expansion, and the global shift toward cleaner, efficient energy solutions. This diversification is lifting revenue and supporting higher EBITDA margins, and is offsetting softness in the traditional truck markets.
Want to see what sits behind that fair value for Cummins? The narrative leans on a tight backlog, richer margins, and a rerating of future earnings. The key inputs span revenue, profit margins, and the valuation multiple the market could eventually pay.
Result: Fair Value of $748.81 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Cummins investors still need to factor in risks such as weaker North American truck demand, as well as ongoing regulatory or tariff uncertainty that could pressure margins and earnings.
Find out about the key risks to this Cummins narrative.
Another View On Cummins Valuation
The narrative fair value for Cummins sits around $748.81 and frames the stock as 13.2% undervalued. On a simple earnings multiple, the picture is less generous. Cummins trades on about 33x P/E versus a 28x industry average, even though a fair ratio of 40x implies the market could still move higher over time. That mix of a premium to peers and a discount to the fair ratio leaves you weighing whether current expectations already bake in much of the story or still leave meaningful upside on the table.
To see what the numbers say about this price, and how they compare to peers and that higher fair ratio, take a closer look at our valuation breakdown through the See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
With Cummins showing both strong recent returns and some clear question marks, it makes sense to move quickly and weigh the full picture for yourself. A helpful place to start is by checking the balance between potential upsides and the issues investors are watching through the 2 key rewards and 1 important warning sign
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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