Cummins Inc. (NYSE:CMI)

The financial data reveals varying performance trends over the five-year period.

Net income attributable to Cummins Inc.

Net income exhibited a decline from 2,260 million US dollars in 2019 to 1,789 million in 2020, likely reflecting external challenges faced during that period. The figure then recovered in 2021 and 2022 to 2,131 million and 2,151 million respectively, indicating a return to near pre-2019 levels. However, in 2023, net income decreased sharply to 735 million, signaling considerable profitability challenges or extraordinary expenses during that year.

Earnings before tax (EBT)

EBT followed a somewhat similar pattern to net income, declining from 2,834 million in 2019 to 2,338 million in 2020. It subsequently rose to 2,751 million in 2021 and 2,819 million in 2022, showing resilience and operational recovery. In 2023, EBT decreased significantly to 1,626 million, reflecting reduced earnings capacity or increased costs impacting pre-tax profitability.

Earnings before interest and tax (EBIT)

EBIT also decreased in 2020 to 2,438 million from a 2019 value of 2,943 million but increased in the following years, reaching a peak of 3,018 million in 2022. This peak surpasses the 2019 level, suggesting improved operational efficiency or revenue growth in 2022. Nonetheless, EBIT dropped markedly to 2,001 million in 2023, indicating operational pressures or increased expenses.

Earnings before interest, tax, depreciation and amortization (EBITDA)

EBITDA followed the general trend with a dip from 3,615 million in 2019 to 3,111 million in 2020, then recovery and growth to 3,524 million in 2021 and further increase to 3,802 million in 2022, showing strengthening earnings capacity and cash flow generation. The figure decreased to 3,025 million in 2023, a significant decline but less pronounced compared to the drops observed in net income and EBIT, suggesting depreciation and amortization or other non-operational items may have also affected net profitability strongly in that year.

Overall, the data indicates a downturn in 2020 followed by recovery and growth through 2021 and 2022, with 2022 showing strong operational performance. However, 2023 presents a notable decline across all metrics, particularly in net income and earnings before tax, which could point to extraordinary challenges or cost increases that have adversely affected profitability.

Enterprise Value (EV)

The enterprise value exhibited a general upward trend over the observed period. It increased significantly from US$26,544 million at the end of 2019 to US$37,421 million in 2020. Subsequently, it declined to US$33,733 million in 2021 before rising again to US$41,393 million in 2022 and then stabilizing slightly at US$41,445 million in 2023. This pattern indicates notable fluctuations with an overall expansion in the company's market valuation.

Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)

EBITDA showed variability with a downward movement in certain years. Starting at US$3,615 million in 2019, it decreased to US$3,111 million in 2020, before recovering to US$3,524 million in 2021. The figure peaked at US$3,802 million in 2022 and thereafter declined to US$3,025 million in 2023. This sequence reflects fluctuating operational profitability with a decline at the beginning and end of the period.

EV/EBITDA Ratio

The valuation multiple represented by the EV/EBITDA ratio experienced significant fluctuations. It surged from 7.34 at the end of 2019 to a high of 12.03 in 2020, indicating a marked increase in valuation relative to earnings. Following this, it decreased to 9.57 in 2021, rose again to 10.89 in 2022, and reached the highest point of 13.7 in 2023. These changes suggest varying market perceptions and possibly shifts in expected growth or risk premia over time.