Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
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Cummins Inc. pages available for free this week:
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Reportable Segments
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Debt
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Current Valuation Ratios
Cummins Inc., current price multiples
| Cummins Inc. | Boeing Co. | Caterpillar Inc. | Eaton Corp. plc | GE Aerospace | Honeywell International Inc. | Lockheed Martin Corp. | RTX Corp. | Capital Goods | Industrials | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||
| Current share price (P) | |||||||||||||
| No. shares of common stock outstanding | |||||||||||||
| Growth rate (g) | |||||||||||||
| Earnings per share (EPS) | |||||||||||||
| Next year expected EPS | |||||||||||||
| Operating profit per share | |||||||||||||
| Sales per share | |||||||||||||
| Book value per share (BVPS) | |||||||||||||
| Valuation Ratios (Price Multiples) | |||||||||||||
| Price to earnings (P/E) | |||||||||||||
| Price to next year expected earnings | |||||||||||||
| Price-earnings-growth (PEG) | |||||||||||||
| Price to operating profit (P/OP) | |||||||||||||
| Price to sales (P/S) | |||||||||||||
| Price to book value (P/BV) | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Cummins Inc., historical price multiples
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Price to earnings (P/E) | ||||||
| Price to operating profit (P/OP) | ||||||
| Price to sales (P/S) | ||||||
| Price to book value (P/BV) |
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).
- Price to Earnings (P/E) Ratio
- The Price to Earnings ratio exhibited significant volatility over the five-year period. It increased sharply from 10.92 in 2019 to a peak of 20.23 in 2020, potentially reflecting investor optimism or changes in earnings performance during that year. Following this peak, the ratio declined to 14.94 in 2021 and slightly rose to 16.33 in 2022. A pronounced surge occurred in 2023, with the ratio reaching 49.57, indicating a substantial increase in market valuation relative to earnings. This spike may suggest elevated market expectations or a decrease in earnings during that year.
- Price to Operating Profit (P/OP) Ratio
- The Price to Operating Profit ratio followed a trend similar to the P/E ratio but with less extreme fluctuations. It sharply rose from 9.14 in 2019 to 15.95 in 2020, indicating increased market valuation relative to operating profit. The ratio then decreased to around 11.76 in 2021 and stabilized marginally to 11.99 in 2022. A notable increase was observed again in 2023, with the ratio climbing to 20.69, although this rise is less pronounced compared to the P/E ratio, suggesting some divergence between operating profitability and net earnings valuation.
- Price to Sales (P/S) Ratio
- The Price to Sales ratio demonstrated a more subdued and relatively stable trend. It increased from 1.05 in 2019 to 1.83 in 2020, indicating higher valuation relative to sales in that year. However, from 2021 onwards, the ratio gradually declined, falling to 1.33 in 2021, 1.25 in 2022, and nearly reverting to the 2019 level at 1.07 in 2023. This pattern suggests that valuation relative to revenue stabilized and normalized after the 2020 peak.
- Price to Book Value (P/BV) Ratio
- The Price to Book Value ratio gradually increased throughout the period under review. Beginning at 3.29 in 2019, it rose steadily to 4.49 in 2020, decreased slightly to 3.76 in 2021, and then increased again to 3.91 in 2022. The upward trend continued in 2023, reaching 4.12. This indicates a generally rising market valuation in relation to the book value of the company, signaling improved investor confidence or asset revaluations over time.
Price to Earnings (P/E)
Cummins Inc., historical P/E 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 | ||||||
| Selected Financial Data (US$) | ||||||
| Net income attributable to Cummins Inc. (in millions) | ||||||
| Earnings per share (EPS)2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/E ratio4 | ||||||
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| P/E Ratio, Sector | ||||||
| Capital Goods | ||||||
| P/E Ratio, Industry | ||||||
| Industrials | ||||||
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.
2 2023 Calculation
EPS = Net income attributable to Cummins Inc. ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of Cummins Inc. Annual Report.
4 2023 Calculation
P/E ratio = Share price ÷ EPS
= ÷ =
5 Click competitor name to see calculations.
The analysis of the financial data reveals several notable trends over the five-year period from 2019 to 2023.
- Share Price
- The share price showed an overall increasing trend from 2019 through 2023. It grew significantly from $164.3 in 2019 to $245.11 in 2020, then experienced a slight decline in 2021 to $223.51. Afterward, the price increased again to $248.41 in 2022 and further to $256.85 in 2023. This upward trajectory suggests positive market perception and investor confidence over the majority of the period.
- Earnings Per Share (EPS)
- EPS exhibited fluctuations during the analyzed years. Starting at $15.04 in 2019, it decreased to $12.12 in 2020, followed by a recovery to $14.96 in 2021 and a slight increase to $15.21 in 2022. However, in 2023, EPS dropped sharply to $5.18. This sudden decline in EPS indicates a significant reduction in profitability or earnings available to shareholders in the most recent year.
- Price-to-Earnings (P/E) Ratio
- The P/E ratio demonstrated notable variability. It increased from 10.92 in 2019 to a peak of 20.23 in 2020, reflecting higher investor expectations despite the drop in EPS. The ratio then decreased to 14.94 in 2021, followed by a rise to 16.33 in 2022. In 2023, the P/E ratio surged to 49.57, a substantial increase potentially driven by the sharp decline in EPS while the share price remained high. This elevated ratio may indicate that the market is pricing in expectations of future earnings growth despite recent profit declines.
Price to Operating Profit (P/OP)
Cummins Inc., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Operating income (in millions) | ||||||
| Operating profit per share2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/OP ratio4 | ||||||
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| P/OP Ratio, Sector | ||||||
| Capital Goods | ||||||
| P/OP Ratio, Industry | ||||||
| Industrials | ||||||
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.
2 2023 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of Cummins Inc. Annual Report.
4 2023 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= ÷ =
5 Click competitor name to see calculations.
The share price of the company has demonstrated an overall upward trend from 2019 to 2023. Starting at $164.30 in 2019, it experienced a significant increase to $245.11 in 2020. Although there was a slight decline to $223.51 in 2021, the share price rebounded to reach $248.41 in 2022 and continued its ascent to $256.85 in 2023.
Operating profit per share exhibited a different pattern. It began at $17.97 in 2019 and decreased to $15.37 in 2020. Subsequently, it increased notably to $19.00 in 2021 and further to $20.72 in 2022. However, in 2023, there was a marked decline to $12.41, representing the lowest level over the five-year period.
The Price to Operating Profit (P/OP) ratio reveals insights into market valuation relative to operating profits. This ratio was 9.14 in 2019, sharply rising to 15.95 in 2020. It then decreased to 11.76 in 2021 and showed a slight increase to 11.99 in 2022. In 2023, the P/OP ratio surged to 20.69, the highest point in the observed timeframe, indicating that the share price grew disproportionately compared to operating profit per share in that year.
- Share Price Trend
- Overall increasing trend with a dip in 2021, followed by growth in subsequent years.
- Operating Profit per Share
- Fluctuated over the period, with a dip in 2020, recovery in 2021-2022, and a significant decline in 2023.
- P/OP Ratio
- Generally elevated in 2020 and 2023, suggesting periods where share price outpaced operating profit growth, with particularly high valuation relative to profits in 2023.
Price to Sales (P/S)
Cummins Inc., historical P/S calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Net sales (in millions) | ||||||
| Sales per share2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/S ratio4 | ||||||
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| P/S Ratio, Sector | ||||||
| Capital Goods | ||||||
| P/S Ratio, Industry | ||||||
| Industrials | ||||||
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.
2 2023 Calculation
Sales per share = Net sales ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of Cummins Inc. Annual Report.
4 2023 Calculation
P/S ratio = Share price ÷ Sales per share
= ÷ =
5 Click competitor name to see calculations.
The analysis of the financial data reveals several key trends over the five-year period from December 31, 2019, to December 31, 2023.
- Share Price
- The share price exhibited a general upward trajectory, starting at $164.30 in 2019 and rising to $256.85 by the end of 2023. There was a notable increase in 2020, reaching $245.11, followed by a dip in 2021 to $223.51. Subsequently, the share price recovered and increased moderately in the years 2022 and 2023.
- Sales Per Share
- Sales per share showed variability with an overall upward trend. The metric decreased from $156.86 in 2019 to $134.17 in 2020, reflecting a contraction likely due to external factors affecting sales. From 2020 onwards, there was a consistent annual increase, reaching $240.14 by 2023, which signifies improving sales revenue attributed to each outstanding share.
- Price-to-Sales (P/S) Ratio
- The P/S ratio, reflecting the relationship between share price and sales per share, peaked in 2020 at 1.83, indicating that the share price was high relative to sales that year. Following this peak, the ratio gradually declined each year to 1.07 in 2023, approaching the level observed in 2019. This decline suggests that while sales per share have increased, the share price has not risen at a matching pace, potentially indicating a normalization or a revaluation by the market.
In summary, the share price experienced volatility with an upward trend culminating in 2023. Sales per share initially contracted but subsequently showed strong growth. The P/S ratio peaked in 2020, suggesting a market premium at that time, then normalized by 2023, reflecting closer alignment between price and sales growth. Overall, the data indicates improved sales performance coupled with moderate appreciation in market valuation over the period.
Price to Book Value (P/BV)
Cummins Inc., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Total Cummins Inc. shareholders’ equity (in millions) | ||||||
| Book value per share (BVPS)2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/BV ratio4 | ||||||
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| P/BV Ratio, Sector | ||||||
| Capital Goods | ||||||
| P/BV Ratio, Industry | ||||||
| Industrials | ||||||
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.
2 2023 Calculation
BVPS = Total Cummins Inc. shareholders’ equity ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of Cummins Inc. Annual Report.
4 2023 Calculation
P/BV ratio = Share price ÷ BVPS
= ÷ =
5 Click competitor name to see calculations.
The analysis of the provided financial data reveals several relevant trends over the five-year period.
- Share Price
- The share price experienced a noticeable increase from $164.30 in 2019 to a peak of $245.11 in 2020. Subsequently, it declined to $223.51 in 2021 before rising again to $248.41 in 2022 and $256.85 in 2023. Overall, the share price shows a general upward trajectory with some fluctuations, suggesting strong market performance and investor confidence despite some volatility.
- Book Value per Share (BVPS)
- The book value per share demonstrated consistent growth throughout the period, increasing steadily from $49.96 in 2019 to $62.39 in 2023. This indicates a sustained improvement in the company’s net asset value on a per-share basis, reflecting asset growth or retained earnings accumulation over time.
- Price-to-Book Value Ratio (P/BV)
- The P/BV ratio started at 3.29 in 2019 and rose sharply to 4.49 in 2020, indicating that the market valued the shares significantly higher relative to their book value at that point. It then decreased to 3.76 in 2021 but climbed again in the subsequent two years to 3.91 in 2022 and 4.12 in 2023. These fluctuations suggest changing market perceptions of the company’s growth prospects and profitability relative to its book value, with the ratio consistently remaining above 3.0, implying premium valuation by investors.
In summary, the company exhibited growth in intrinsic value as reflected by the increase in book value per share, accompanied by an overall strengthening share price. The Price-to-Book ratio trends indicate that the market maintained a favorable outlook on the company, valuing it at a premium throughout the timeframe. Occasional shifts in share price and P/BV ratio suggest periods of reassessment by investors, potentially driven by external market conditions or company-specific developments.