Are Investors Undervaluing Cummins (CMI) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Cummins (CMI). CMI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 12.24, while its industry has an average P/E of 12.40. CMI's Forward P/E has been as high as 19.78 and as low as 12.01, with a median of 16.84, all within the past year.
Investors should also note that CMI holds a PEG ratio of 1.09. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CMI's PEG compares to its industry's average PEG of 1.11. Within the past year, CMI's PEG has been as high as 3.04 and as low as 1.07, with a median of 1.91.
Another notable valuation metric for CMI is its P/B ratio of 3.67. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.72. Over the past 12 months, CMI's P/B has been as high as 4.53 and as low as 3.55, with a median of 3.92.
Finally, our model also underscores that CMI has a P/CF ratio of 11.42. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. CMI's current P/CF looks attractive when compared to its industry's average P/CF of 13.23. CMI's P/CF has been as high as 16.74 and as low as 11.16, with a median of 14.64, all within the past year.
These are just a handful of the figures considered in Cummins's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CMI is an impressive value stock right now.
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Cummins Inc. (CMI): Free Stock Analysis Report
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