Cummins

Methodology

Cummins' diesel and natural gas engines plus power generation equipment create cyclical earnings tied to commercial truck production, construction equipment demand, and industrial activity. The company's diversification across end markets and aftermarket parts provide some stability. This calculation requires mid-cycle assumptions—Cummins' results fluctuate dramatically with truck and equipment cycles, making normalized volume and pricing estimates more reliable than peak or trough figures.

Methodology

Cummins' PEG ratio can swing from 1.0-2.5 across industrial cycles, often appearing attractive during downturns when rebounds are likely but current earnings are depressed. The company's transition toward electrification and hydrogen creates both opportunities and execution risk. Compare to other engine manufacturers and industrial equipment suppliers to assess whether Cummins' cycle positioning and energy transition strategy justify current valuations.

Methodology

Cummins' dividend yield (typically 2.0-3.0%) provides downside cushion during cyclical downturns in truck and equipment markets. The company's 15+ year history of consecutive annual increases demonstrates commitment to shareholder returns through cycles. PEGY better captures the investment proposition for Cummins, where dividend stability complements the cyclical growth profile and helps sustain total returns during inevitable industrial downturns.