Cummins (CMI) Stock Forecast & Price Target

Cummins is projecting sales growth of 3-8% for FY2026, implying revenues between $34.68 billion and $36.36 billion, driven by robust demand across global power generation markets and higher volumes in other segments. The company reported a significant 18% increase in Power Systems sales to $1.996 billion, surpassing Street expectations and highlighting strong demand, particularly in data center applications. Furthermore, adjusted EPS for the quarter increased 12.5% year-over-year, exceeding consensus estimates, which reflects Cummins' effective pricing strategies and growing market demand despite some regional volume challenges.

Cummins has experienced a significant decline in gross margins, decreasing by 120 basis points year-over-year to 22.9%, primarily due to lower North American truck volumes, increased product coverage costs, and a negative impact from tariffs. Adjusted EBITDA figures reveal a downward trend, with adjusted EBITDA margins falling to 10.0%—a 470 basis point reduction year-over-year—driven largely by weak North American heavy-duty truck volumes and costs associated with new engine platform investments. Additionally, Cummins anticipates a decrease in revenues from China by 1% for FY’26 due to ongoing weakness in heavy and medium-duty truck demand, compounded by geopolitical uncertainties affecting export demand.