In a sliding market, Cummins has defied the odds, trading up to $551.68 per share. Its 32% gain since September 2025 has outpaced the S&P 500’s 1.3% drop. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now the time to buy Cummins, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is Cummins Not Exciting?
We’re glad investors have benefited from the price increase, but we're sitting this one out for now. Here are three reasons you should be careful with CMI and a stock we'd rather own.
1. Revenue Growth Flatlining
Long-term growth is the most important, but within industrials, a stretched historical view may miss new industry trends or demand cycles. Cummins’s recent performance shows its demand has slowed significantly as its revenue was flat over the last two years. 
2. Low Gross Margin Reveals Weak Structural Profitability
All else equal, we prefer higher gross margins because they usually indicate that a company sells more differentiated products and commands stronger pricing power.
Cummins has bad unit economics for an industrials company, giving it less room to reinvest and develop new offerings. As you can see below, it averaged a 24.6% gross margin over the last five years. That means Cummins paid its suppliers a lot of money ($75.38 for every $100 in revenue) to run its business. 
3. New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Cummins’s ROIC averaged 1.9 percentage point decreases each year over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.
Final Judgment
Cummins isn’t a terrible business, but it doesn’t pass our quality test. With its shares topping the market in recent months, the stock trades at 21.1× forward P/E (or $551.68 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are more exciting stocks to buy at the moment. We’d suggest looking at the most entrenched endpoint security platform on the market.
Stocks We Like More Than Cummins
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
