Bernstein SocGen Group raised its price objective on Cummins Inc. to $600 from $544 while retaining a Market Perform rating following the company’s fourth-quarter earnings release. Cummins last traded near $566.63, and analyst targets for the stock range from $450 to $675.
The company reported adjusted earnings per share of $5.81 for the fourth quarter, a 14% beat versus expectations. Of that adjusted EPS, $1.54 was attributed to Accelera charges. Quarterly EBITDA came in at $1.4 billion, roughly 2% ahead of estimates. On a trailing-12-month basis, Cummins posted diluted EPS of $20.50 and total EBITDA of $4.98 billion.
Despite the beat on adjusted EPS and a small EBITDA upside, the stock fell 11% after management issued full-year guidance that came in below Street expectations, with margins driving the disappointment. That decline followed a year-to-date advance of 16% for Cummins, compared with a 2% gain for the S&P.
Guidance and margins
Cummins projected net sales growth of 5.5% and an EBITDA margin of 17.5% for the year ahead. Those assumptions imply $35.5 billion in sales - roughly in line with consensus - and $6.2 billion in EBITDA, which is about 1% below consensus. Management signaled that expected EBITDA shortfalls relative to Street forecasts are present across its Engine, Distribution, and Components segments.
The guidance builds on a current revenue base of $33.67 billion and sits alongside a reported current ratio of 1.76, indicating that liquid assets exceed short-term obligations.
Headwinds called out by the company
Management identified tariffs as a notable headwind, estimating a 50 basis point drag on 2026 EBITDA margins - approximately a $180 million impact - and suggesting this creates a 10 percentage point drag on full-year incrementals. In addition, the Distribution segment faces pressure from negative mix as well as rising SG&A investments that are expected to outpace the guided revenue growth rate.
Additional quarterly detail and investor reaction
In other results disclosed for the period, Cummins reported an EPS of $4.27 for the fourth quarter of 2025, missing the anticipated $5.01 by roughly 14.77%. Revenue for that period was $8.5 billion, beating the forecasted $8.08 billion. That divergence between revenue and EPS has become a focal point for investors, highlighting the disconnect between top-line strength and bottom-line pressure.
Analyst firms have not yet publicly recorded widespread rating changes following the earnings report. The combination of an earnings beat in the adjusted metrics, a small EBITDA upside, and conservatively framed guidance has left investors and analysts debating the near-term implications for margins and cash conversion.
Outlook for markets and sectors
The results and guidance touch multiple parts of the industrial economy. Margin pressure and tariff impacts have implications for engine manufacturing, parts distribution networks, and components suppliers, as well as for broader industrial supply chains that depend on cost predictability and working-capital management.
Bernstein SocGen's move to raise its price target while keeping a Market Perform rating reflects that mixed signal: the firm increased its valuation outlook but did not upgrade its view on the stock’s expected outperformance versus the market.
Investors will likely focus on how management converts the current revenue base into higher incremental margins, how it offsets tariff and mix headwinds, and whether SG&A investments in Distribution begin to yield incremental returns that justify the near-term pressure on margins.