Is Cummins, Inc. overvalued or undervalued?

As of 5 August 2025, the valuation grade for Cummins, Inc. moved from expensive to fair. The company appears fairly valued based on its current metrics. Key ratios include a P/E ratio of 25, an EV to EBITDA of 15.74, and a Price to Book Value of 6.49. In comparison, Caterpillar, Inc. has a P/E of 32.72 and an EV to EBITDA of 24.99, while PACCAR, Inc. shows a more favorable P/E of 16.81 and an EV to EBITDA of 11.43.
Cummins, Inc. has outperformed the S&P 500 over multiple periods, with a year-to-date return of 22.31% compared to the S&P 500's 12.22%, and a one-year return of 41.82% against 17.14% for the index. This performance reinforces the narrative that the stock is fairly valued given its competitive positioning and returns relative to the broader market.