CMI
Cummins Inc.
$522.13
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 25.0% above fair value
You pay
$522.13
Bear
$290.21
Fair
$417.85
Bull
$547.07
Bear
$290.21
-44.4%
7% stage 1 growth, 11% discount
Fair
$417.85
-20.0%
11% stage 1 growth, 11% discount
Bull
$547.07
+4.8%
15% stage 1 growth, 11% discount
Adjust Assumptions
11.2%
11.0%
3.0%
Key Value Driver
FCF growth rate (11% base case)
Terminal Value % of EV
40%
Implied Market Multiple
29.0x
Market is pricing in (growth)
14.0%
vs 11.2% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (51 analysts)
$740.00
Divergence from AlphaVal
44%
Summary
Using a two-stage FCF DCF with 11% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $417.85 per share.
Warnings
Wall Street's average price target is $740.00 (from 51 analysts). Our estimate is 44% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions