Is Cummins, Inc. overvalued or undervalued?

As of 3 October 2025, the valuation grade for Cummins, Inc. has moved from fair to expensive, indicating a shift towards overvaluation. The company is currently assessed as overvalued based on its P/E ratio of 25, which is lower than the peer average of 28.99 for Cummins but higher than PACCAR, Inc. at 16.81. Additionally, Cummins has an EV to EBITDA of 15.74, which is also less favorable compared to Caterpillar, Inc. at 24.99, suggesting that Cummins may not be a bargain relative to its peers.
In terms of performance, Cummins has shown strong returns, with a year-to-date return of 24.15% compared to the S&P 500's 14.18%, and a one-year return of 32.21% against the S&P 500's 17.82%. This performance indicates that while the stock has been rewarding for investors, the current valuation metrics suggest it may be priced too high relative to its earnings potential and peer comparisons.