CUMMINS INCCMI

In FY2025, Cummins generated $3.6 billion^a in operating cash flow—a $2.1 billion jump—even as total sales contracted by 1%. This cash-generating resilience forms the core investment thesis for the manufacturer: Cummins can successfully fund its transition to zero-emission powertrains and absorb restructuring costs without sacrificing shareholder returns or balance sheet health.

The company's top-line trajectory illustrates a structural expansion, as revenue grew from $24.02 billion in FY2021 to $33.7 billion^b in FY2025. Much of this growth stems from the $2.9 billion acquisition of Meritor, though organic demand shifted toward alternative segments. In FY2025, the Power Systems division posted a 16% sales increase driven by data center power needs, cushioning the blow from weaker on-highway truck markets. While the early-stage Accelera segment dragged on profitability with a $458 million charge, reducing overall net income by 28% to $2.8 billion, management continued to deleverage. The debt-to-capital ratio improved to 36.0%, and the company authorized a 10% dividend hike to $2.00 per share.

At the close of FY2025, the market priced the stock at $510.45^c, assigning Cummins a 24.9x P/E ratio against its $20.50 EPS. This valuation reflects investor confidence in a business capable of sustaining liquidity and dividend growth while navigating heavy end-market cyclicality.