CMI

Cummins is a high-quality cyclical industrial — it calls itself "a global power leader" spanning five segments (Engine, Components, Distribution, Power Systems, Accelera), selling to leading OEMs (PACCAR, Traton, Daimler, Stellantis) across ~190 countries. The operating engine is actually strengthening: in FY2025 operating income rose +7.3% to $4.03B and gross profit +0.9% even as revenue slipped -1.3% to $33.7B, evidence of pricing and cost discipline. Returns are strong (ROE 23.9%), equity grew +20.2% to $12.3B, cash +70.3% to $2.85B, and operating cash flow surged +143.5% to $3.62B (~$2.4B FCF after $1.24B capex). The scary-looking net income (-27.3%) and EPS (-27.7%) are mostly a comparison artifact against an inflated 2024 ($4.07B), not deteriorating fundamentals.

The offset is a stalled, cyclical top line. Revenue plateaued ($34.1B in 2023 → $34.1B in 2024 → $33.7B in 2025) and net income has whipsawed ($840M → $4.07B → $2.96B over three years), which makes earnings genuinely hard to value. The MD&A is candid that demand "tends to fluctuate in response to overall economic conditions," that downturns "result in reduced sales" and price pressure, and that results are exposed to "OEM inventory levels," "tariffs and related trade disruptions," currency swings, emissions regulation, and investments in higher-risk countries (China, Brazil, India, Mexico). This is a cyclical sitting at a flat point in its cycle.