Return on Equity (ROE)
since 2005
Calculation
Cummins Inc., ROE, long-term trends, calculation
| ROE | = | 100 | × | Net income attributable to Cummins Inc.1 | ÷ | Total Cummins Inc. shareholders’ equity1 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2023 | 8.31% | = | 100 | × | 735) | ÷ | 8,850) |
| Dec 31, 2022 | 23.97% | = | 100 | × | 2,151) | ÷ | 8,975) |
| Dec 31, 2021 | 25.15% | = | 100 | × | 2,131) | ÷ | 8,474) |
| Dec 31, 2020 | 22.19% | = | 100 | × | 1,789) | ÷ | 8,062) |
| Dec 31, 2019 | 30.11% | = | 100 | × | 2,260) | ÷ | 7,507) |
| Dec 31, 2018 | 29.14% | = | 100 | × | 2,141) | ÷ | 7,348) |
| Dec 31, 2017 | 13.76% | = | 100 | × | 999) | ÷ | 7,259) |
| Dec 31, 2016 | 20.28% | = | 100 | × | 1,394) | ÷ | 6,875) |
| Dec 31, 2015 | 18.89% | = | 100 | × | 1,399) | ÷ | 7,406) |
| Dec 31, 2014 | 21.31% | = | 100 | × | 1,651) | ÷ | 7,749) |
| Dec 31, 2013 | 19.75% | = | 100 | × | 1,483) | ÷ | 7,510) |
| Dec 31, 2012 | 24.91% | = | 100 | × | 1,645) | ÷ | 6,603) |
| Dec 31, 2011 | 33.65% | = | 100 | × | 1,848) | ÷ | 5,492) |
| Dec 31, 2010 | 22.27% | = | 100 | × | 1,040) | ÷ | 4,670) |
| Dec 31, 2009 | 11.34% | = | 100 | × | 428) | ÷ | 3,773) |
| Dec 31, 2008 | 23.37% | = | 100 | × | 755) | ÷ | 3,230) |
| Dec 31, 2007 | 21.68% | = | 100 | × | 739) | ÷ | 3,409) |
| Dec 31, 2006 | 25.52% | = | 100 | × | 715) | ÷ | 2,802) |
| Dec 31, 2005 | 29.51% | = | 100 | × | 550) | ÷ | 1,864) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
1 US$ in millions
The Return on Equity (ROE) exhibits significant volatility over the period from 2005 to 2023, characterized by cyclical peaks and troughs that align closely with fluctuations in net income. While shareholders' equity maintained a consistent upward trajectory for nearly two decades, the ROE remained highly sensitive to the variability of bottom-line earnings.
- Profitability and Efficiency Peaks
- The highest ROE was recorded in 2011 at 33.65%, followed by another period of strong performance between 2018 and 2019, where ROE peaked at 30.11%. These intervals correlate with substantial increases in net income, reflecting phases of high operational efficiency relative to the invested equity.
- Cyclical Downturns
- Significant contractions in ROE occurred in 2009, where the ratio dropped to 11.34%, and again in 2017, falling to 13.76%. The 2009 decline was particularly acute, coinciding with a sharp reduction in net income to 428 million US$, indicating a period of suppressed profitability.
- Equity Expansion and Impact on Returns
- Shareholders' equity grew steadily from 1,864 million US$ in 2005 to a peak of 8,975 million US$ in 2022. This consistent expansion of the capital base implies that maintaining a high ROE required increasingly higher absolute net income figures over time to offset the growth in the denominator.
- Recent Performance Trend
- A marked deterioration in ROE is observed in 2023, falling to 8.31%, the lowest level within the analyzed timeframe. This decline is primarily attributed to a sharp reduction in net income to 735 million US$, occurring while the equity base remained near its historical peak of 8,850 million US$.
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Comparison to Competitors
Cummins Inc., ROE, long-term trends, comparison to competitors
| Cummins Inc. | Boeing Co. | Caterpillar Inc. | Eaton Corp. plc | GE Aerospace | Honeywell International Inc. | Lockheed Martin Corp. | RTX Corp. | |
|---|---|---|---|---|---|---|---|---|
| Dec 31, 2023 | 8.31% | — | 53.02% | 16.90% | 34.63% | 35.68% | 101.24% | 5.34% |
| Dec 31, 2022 | 23.97% | — | 42.25% | 14.45% | 0.62% | 29.74% | 61.86% | 7.16% |
| Dec 31, 2021 | 25.15% | — | 39.37% | 13.06% | -16.17% | 29.85% | 57.62% | 5.29% |
| Dec 31, 2020 | 22.19% | — | 19.56% | 9.44% | 16.04% | 27.23% | 113.60% | -4.88% |
| Dec 31, 2019 | 30.11% | — | 41.77% | 13.75% | -17.58% | 33.22% | 199.23% | 13.25% |
| Dec 31, 2018 | 29.14% | 3,085.55% | 43.79% | 13.32% | -72.16% | 37.21% | 361.98% | 13.70% |
| Dec 31, 2017 | 13.76% | 2,309.01% | 5.50% | 17.30% | -9.00% | 9.58% | — | 15.37% |
| Dec 31, 2016 | 20.28% | 599.14% | -0.51% | 12.90% | 11.65% | 24.83% | 350.89% | 18.33% |
| Dec 31, 2015 | 18.89% | 81.70% | 14.19% | 13.03% | -6.23% | 26.08% | 116.40% | 27.81% |
| Dec 31, 2014 | 21.31% | 62.85% | 22.06% | 11.36% | 11.89% | 24.01% | 106.29% | 19.93% |
| Dec 31, 2013 | 19.75% | 30.82% | 18.21% | 11.08% | 10.00% | 22.47% | 60.61% | 17.95% |
| Dec 31, 2012 | 24.91% | 66.47% | 32.40% | 8.07% | 11.09% | 22.55% | 7,038.46% | 19.80% |
| Dec 31, 2011 | 33.65% | 114.31% | 38.25% | 18.07% | 12.15% | 19.13% | 265.23% | 22.76% |
| Dec 31, 2010 | 22.27% | 119.56% | 24.94% | 12.62% | 9.79% | 18.96% | 78.91% | 20.45% |
| Dec 31, 2009 | 11.34% | 61.65% | 10.24% | 5.65% | 9.40% | 24.34% | 73.24% | 19.08% |
| Dec 31, 2008 | 23.37% | — | 58.44% | 16.75% | 16.63% | 38.85% | 112.29% | 29.46% |
| Dec 31, 2007 | 21.68% | 45.25% | 39.86% | 19.22% | 19.22% | 26.50% | 30.93% | 19.78% |
| Dec 31, 2006 | 25.52% | 46.74% | 51.57% | 23.14% | 18.55% | 21.43% | 36.74% | 21.58% |
| Dec 31, 2005 | 29.51% | 23.26% | 33.85% | 21.31% | 14.95% | 14.71% | 23.20% | 18.06% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Sector (Capital Goods)
Cummins Inc., ROE, long-term trends, comparison to sector (capital goods)
| Cummins Inc. | Capital Goods | |
|---|---|---|
| Dec 31, 2023 | 8.31% | 27.89% |
| Dec 31, 2022 | 23.97% | 13.39% |
| Dec 31, 2021 | 25.15% | 8.48% |
| Dec 31, 2020 | 22.19% | 4.42% |
| Dec 31, 2019 | 30.11% | 18.11% |
| Dec 31, 2018 | 29.14% | 11.28% |
| Dec 31, 2017 | 13.76% | 10.13% |
| Dec 31, 2016 | 20.28% | 20.08% |
| Dec 31, 2015 | 18.89% | 10.42% |
| Dec 31, 2014 | 21.31% | 18.16% |
| Dec 31, 2013 | 19.75% | 15.14% |
| Dec 31, 2012 | 24.91% | 17.58% |
| Dec 31, 2011 | 33.65% | 19.63% |
| Dec 31, 2010 | 22.27% | 15.88% |
| Dec 31, 2009 | 11.34% | 13.47% |
| Dec 31, 2008 | 23.37% | 24.97% |
| Dec 31, 2007 | 21.68% | 22.64% |
| Dec 31, 2006 | 25.52% | 22.16% |
| Dec 31, 2005 | 29.51% | 17.27% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Industry (Industrials)
Cummins Inc., ROE, long-term trends, comparison to industry (industrials)
| Cummins Inc. | Industrials | |
|---|---|---|
| Dec 31, 2023 | 8.31% | 27.70% |
| Dec 31, 2022 | 23.97% | 15.38% |
| Dec 31, 2021 | 25.15% | 15.38% |
| Dec 31, 2020 | 22.19% | 0.24% |
| Dec 31, 2019 | 30.11% | 14.56% |
| Dec 31, 2018 | 29.14% | 17.95% |
| Dec 31, 2017 | 13.76% | 18.24% |
| Dec 31, 2016 | 20.28% | 21.69% |
| Dec 31, 2015 | 18.89% | 16.11% |
| Dec 31, 2014 | 21.31% | 19.68% |
| Dec 31, 2013 | 19.75% | 16.40% |
| Dec 31, 2012 | 24.91% | 17.20% |
| Dec 31, 2011 | 33.65% | 20.10% |
| Dec 31, 2010 | 22.27% | 16.41% |
| Dec 31, 2009 | 11.34% | 12.84% |
| Dec 31, 2008 | 23.37% | 20.74% |
| Dec 31, 2007 | 21.68% | 20.36% |
| Dec 31, 2006 | 25.52% | 32.16% |
| Dec 31, 2005 | 29.51% | 7.80% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).