Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Cummins Inc., FCFE calculation
US$ in millions
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).
- Net cash provided by operating activities
- The net cash generated from operating activities exhibited a fluctuating trend over the five-year period. Beginning at $3,181 million in 2019, it decreased consistently over the next three years to $2,722 million in 2020, $2,256 million in 2021, and then further to $1,962 million in 2022. However, in 2023, there was a significant recovery and increase to $3,966 million, surpassing the initial 2019 figure. This suggests variability in operational cash generation with a strong rebound in the most recent year.
- Free cash flow to equity (FCFE)
- The free cash flow to equity displayed marked variability throughout the period. It started at $2,276 million in 2019, increased substantially to $3,798 million in 2020, then dropped sharply to $1,518 million in 2021. This was followed by another notable rise to $3,860 million in 2022, before falling again to $1,699 million in 2023. The oscillating pattern indicates fluctuations in the company's capacity to generate cash available to equity holders, with no consistent directional trend over the period.
Price to FCFE Ratio, Current
Cummins Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 136,779,875 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 1,699) |
| FCFE per share | 12.42 |
| Current share price (P) | 280.29 |
| Valuation Ratio | |
| P/FCFE | 22.57 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 19.53 |
| Eaton Corp. plc | 40.71 |
| GE Aerospace | 69.45 |
| Honeywell International Inc. | 8.75 |
| Lockheed Martin Corp. | 12.15 |
| RTX Corp. | 103.40 |
| P/FCFE, Sector | |
| Capital Goods | 27.82 |
| P/FCFE, Industry | |
| Industrials | 28.42 |
Based on: 10-K (reporting date: 2023-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Cummins Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 141,856,847 | 141,375,256 | 142,426,735 | 147,657,584 | 150,269,665 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 1,699) | 3,860) | 1,518) | 3,798) | 2,276) | |
| FCFE per share3 | 11.98 | 27.30 | 10.66 | 25.72 | 15.15 | |
| Share price1, 4 | 256.85 | 248.41 | 223.51 | 245.11 | 164.30 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 21.45 | 9.10 | 20.97 | 9.53 | 10.85 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Boeing Co. | — | 120.43 | — | 6.78 | — | |
| Caterpillar Inc. | 14.39 | 24.03 | 16.36 | 25.22 | — | |
| Eaton Corp. plc | 33.65 | 28.68 | 24.43 | 25.59 | — | |
| GE Aerospace | 225.15 | 44.45 | — | — | — | |
| Honeywell International Inc. | 26.10 | 27.59 | 46.23 | 12.59 | — | |
| Lockheed Martin Corp. | 13.13 | 11.63 | 14.65 | 15.57 | — | |
| RTX Corp. | 7.05 | 26.71 | 35.07 | — | — | |
| P/FCFE, Sector | ||||||
| Capital Goods | 20.26 | 25.94 | — | 74.91 | — | |
| P/FCFE, Industry | ||||||
| Industrials | 23.85 | 25.07 | — | 40.69 | — | |
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).
1 Data adjusted for splits and stock dividends.
3 2023 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,699,000,000 ÷ 141,856,847 = 11.98
4 Closing price as at the filing date of Cummins Inc. Annual Report.
5 2023 Calculation
P/FCFE = Share price ÷ FCFE per share
= 256.85 ÷ 11.98 = 21.45
6 Click competitor name to see calculations.
- Share Price Trend
- The share price exhibited an overall upward trend throughout the period, starting at $164.30 at the end of 2019 and reaching $256.85 by the end of 2023. Notably, there was a significant increase from 2019 to 2020, followed by a slight decline in 2021. Subsequently, the share price resumed its rise in 2022 and 2023, achieving its highest value in the final year of the dataset.
- Free Cash Flow to Equity (FCFE) Per Share Trend
- The FCFE per share showed considerable volatility over the analyzed years. It increased sharply from $15.15 in 2019 to $25.72 in 2020, then dropped substantially to $10.66 in 2021. A recovery was observed in 2022 with a rise to $27.30, but this was again followed by a decline to $11.98 in 2023. These fluctuations suggest variability in the company's free cash flow generation relative to its share count.
- Price to FCFE (P/FCFE) Ratio Analysis
- The P/FCFE ratio followed an inverse pattern relative to the FCFE per share in several periods, indicating changing market valuation dynamics. It decreased from 10.85 in 2019 to 9.53 in 2020, coinciding with the rise in FCFE per share. A sharp increase to 20.97 occurred in 2021, aligning with the drop in FCFE per share. The ratio then declined again to 9.10 in 2022 as FCFE improved, before increasing to 21.45 in 2023, matching the FCFE decline. This pattern suggests market valuation was more expensive when FCFE per share was low, reflecting higher price premiums or investor expectations during periods of lower free cash flow.
- Overall Insights
- The financial metrics present an environment of significant fluctuations in the company’s free cash flow generation, contrasted with a steadily appreciating share price. The pronounced variability in FCFE per share may reflect operational or market conditions affecting cash flow, while the share price growth suggests sustained investor confidence or positive market sentiment. The P/FCFE ratio movements underscore the changing valuation context relative to free cash flow performance. The combination of these trends points to a complex interplay between company fundamentals and market expectations over the analyzed timeframe.