Truist Securities on Friday lifted its 12-month price objective for Cummins Inc. to $703.00, up from $653.00, and reiterated a Buy recommendation on the engine manufacturer's stock. The updated target implies about a 24% potential gain from the then-current share price of $567.31. Third-party data cited in market reports suggests the shares are trading near fair value, with a relative strength index that points toward overbought conditions.
The analyst move comes after Cummins shares declined roughly 11% in the wake of the company's fourth-quarter 2025 earnings release, compared with a 1% drop in the S&P 500 over the same period. The results were mixed: on an adjusted basis, Cummins outperformed consensus expectations for earnings per share by 14%, signaling areas of operational strength across its portfolio, while its GAAP earnings per share showed a shortfall versus forecast.
Within the company's segment reporting, Power Systems delivered notable margin improvement. The division posted a 21.7% EBITDA margin for the quarter, an increase of 370 basis points year-over-year. However, Power Systems fell short of consensus revenue estimates, a shortfall the company attributed to lower aftermarket sales related to the timing of rebuild activity. Management expects Power Systems margins to remain strong in 2026, with guidance pointing to a range of 23% to 24%.
Across the enterprise, Cummins produced total EBITDA of $4.98 billion over the last twelve months. Independent financial scoring referenced in market commentary rated the company’s overall financial health as "GOOD." For full-year 2026, the company’s guidance implies earnings per share of roughly $25.80, about 2% below the consensus on the street. Truist noted that Cummins has a history of conservative guidance, particularly when cyclically sensitive markets such as heavy trucks appear to be at low points.
Valuation metrics cited in market analysis put Cummins at a price-to-earnings ratio of approximately 27.5 on a near-term basis. That metric was described as relatively low when compared with expected near-term earnings growth, according to the same set of analyst observations that include additional proprietary insights available in subscription research reports.
Order trends in Power Systems provided part of the rationale for the bullish view. Fourth-quarter 2025 orders for the division rose both year-over-year and sequentially from third-quarter record levels, and bookings now extend into 2028. Truist interprets that multi-year order visibility as indicative of above-average clarity for future results, which underpins confidence in the business's near-term trajectory.
The company’s history of returning capital to shareholders remains intact: Cummins has paid dividends for 55 consecutive years, and its most recent dividend yield stands at 1.48%. Dividend growth over the last twelve months was reported at 9.89%.
There are, however, contrasting elements to the financial picture. The company reported a notable GAAP earnings-per-share miss for the fourth quarter, with EPS of $4.27 versus a forecast of $5.01, a negative surprise of about 14.77%. At the same time, Cummins beat revenue expectations for the period, reporting $8.5 billion in sales against a consensus projection of $8.08 billion.
In a related analyst action, Bernstein SocGen Group raised its price target on Cummins to $600 from $544 but kept a Market Perform rating. That update followed company disclosures showing adjusted fourth-quarter EPS of $5.81, which exceeded analyst expectations by roughly 14% and included a $1.54 component related to Accelera charges. Cummins also reported quarterly EBITDA of $1.4 billion, about 2% ahead of estimates.
Taken together, recent announcements paint a picture of mixed near-term results: adjusted profitability and top-line strength in some measures contrast with GAAP EPS misses and revenue dynamics in aftermarket channels. Analysts are weighing those factors alongside the firm’s sizable order book, improving Power Systems margins, and a conservative guidance posture as they set valuations and recommendations.
Summary of the situation
- Truist raised its price target on Cummins to $703 and kept a Buy rating, implying roughly 24% upside from the recent share price.
- Power Systems showed margin expansion, but missed revenue estimates due to aftermarket timing; 2026 margin guidance is 23-24%.
- Q4 2025 delivered mixed results - adjusted EPS and revenue beats in some measures, but a GAAP EPS miss and an 11% share price decline followed the report.