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Cummins DCF Stock Analysis

Here’s my assumptions:

Risk Free Rate (10 Years Interest Rate Swap): 4.03%

Risk Premium (Taken from the Aswath Damodaran equity premium spreadsheet): 4.33%

Interest Rate Spread on The Risk free rate ( For the cost of debt calculation): 3.5%

Last 24 Months Beta: 1.07

Historical Data

Revenue growth in the last 10 years (CAGR): 5.96%

Earnings growth in the last 10 years (CAGR): 10.93%

Unlevered Free Cash Flow growth in the last 10 years (CAGR): -16.24% (+0.07% if we use the last TTM results)

Future Assumptions

End of Year FCF growth: 7%

Growth until end of 2026: 15%

Growth until end of 2034: 7%

Perpetual growth: 3.1%

Net Debt: 5.61B

Outstanding Stock Options Present Value Assumption: $0.201B

Restricted Stock Units + Performance Stock Units Present Value Assumption: $0.352B

Stock Valuation based on these assumptions: $354

Last update 08/24/2025

All the content in this newsletter should be taken as informational content only. THIS IS NOT FINANCIAL ADVICE! Do your own Due Diligence before investing or contact a professional financial advisor.

I don’t have a position in Cummins (CMI) and I don’t plan to add a position in the coming days.