Cummins is a well-managed company with a positive track record and promising long-term growth prospects. The company has a unique business profile and a well-recognized brand, which is why many market participants consider Cummins to be the best diesel engine manufacturer in the world. Thanks to its strong market position, the company has significant potential to grow its market share in truck diesel engines as OEMs exit the market. The downward trend in emissions as the global economy moves towards green energy, innovative technologies and the growth of the aftermarket segment are important triggers that will support Cummins’ business in the long term.
We are raising our estimate for Cummins’ profit for 2022 as we increase our estimate for sales of engines for trucks of the Class 8 brand and expect a decline in market share from OEMs as the trend continues to reduce their vertical integration. Rising government spending on US infrastructure and new energy technologies should be a long-term tailwind for Cummins’ businesses. Our target price has been raised from $ 274 to $ 284 per share, which translates into 19% upside potential.
Cummins is the largest and one of the first independent makers of diesel engines and related products in the world. The company designs, manufactures, distributes and services diesel and natural gas engines and powertrain-related component products (including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems and automated transmissions), electric power generation systems, batteries, electrified power systems, hydrogen generation and fuel cell products. Cummins sells its products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. The company serves its customers through a network of approximately 600 wholly-owned and independent distributor locations and over 7,600 dealer locations in more than 190countries and territories. CMI’s reportable operating segments consist of Engine, Distribution, Components, Power Systems, and Electrified Power. Cummins is headquartered in Columbus, Indiana.