Shares of Cummins (CMI) have been strong performers lately, with the stock up 20% over the past month. The stock hit a new 52-week high of $717.33 in the previous session. Cummins has gained 40.2% since the start of the year compared to the -7.6% gain for the Zacks Auto-Tires-Trucks sector and the 40.1% return for the Zacks Automotive - Internal Combustion Engines industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 5, 2026, Cummins reported EPS of $6.15 versus consensus estimate of $5.6.
For the current fiscal year, Cummins is expected to post earnings of $26.06 per share on $35.66 in revenues. This represents a 9.59% change in EPS on a 5.91% change in revenues. For the next fiscal year, the company is expected to earn $30.5 per share on $37.85 in revenues. This represents a year-over-year change of 17.06% and 6.15%, respectively.
Valuation Metrics
Cummins may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Cummins has a Value Score of C. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 27.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 27.5X. On a trailing cash flow basis, the stock currently trades at 22.4X versus its peer group's average of 18.3X. Additionally, the stock has a PEG ratio of 2.26. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Cummins currently has a Zacks Rank of #2 (Buy) thanks to a solid earnings estimate revision trend.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Cummins fits the bill. Thus, it seems as though Cummins shares could have potential in the weeks and months to come.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
