Discounted Cash Flow (DCF) Analysis Unlevered

Cummins Inc. (CMI)

$194.11

+0.58 (+0.30%)

All numbers are in Millions, Currency in USD

Stock DCF: 266.55 | 194.11 | undervalue

Operating Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	20,428	23,771	23,571	19,811	24,021	25,271.44	26,586.97	27,970.99	29,427.05	30,958.91
Revenue (%)
EBITDA	3,034	3,432	3,607	3,089	3,491	3,776.47	3,973.06	4,179.88	4,397.47	4,626.38
EBITDA (%)
EBIT	2,451	2,821	2,935	2,416	2,829	3,047.22	3,205.85	3,372.73	3,548.30	3,733.01
EBIT (%)
Depreciation	583	611	672	673	662	729.25	767.21	807.15	849.16	893.37
Depreciation (%)

Balance Sheet Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Total Cash	1,567	1,525	1,470	3,862	3,187	2,683.04	2,822.71	2,969.65	3,124.24	3,286.87
Total Cash (%)
Account Receivables	3,618	3,866	3,670	3,820	3,990	4,318.24	4,543.03	4,779.52	5,028.33	5,290.08
Account Receivables (%)
Inventories	3,166	3,759	3,486	3,425	4,355	4,120.23	4,334.71	4,560.36	4,797.75	5,047.50
Inventories (%)
Accounts Payable	2,579	2,822	2,534	2,820	3,021	3,136.59	3,299.87	3,471.64	3,652.36	3,842.49
Accounts Payable (%)
Capital Expenditure	-587	-784	-775	-575	-786	-790.19	-831.33	-874.60	-920.13	-968.03
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 194.11
Beta	1.020
Diluted Shares Outstanding	149
Cost of Debt
Tax Rate	22.54
After-tax Cost of Debt	2.07%
Risk-Free Rate
Market Risk Premium
Cost of Equity	7.701
Total Debt	4,159
Total Equity	28,922.39
Total Capital	33,081.39
Debt Weighting	12.57
Equity Weighting	87.43
Wacc

Build Up Free Cash

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	20,428	23,771	23,571	19,811	24,021	25,271.44	26,586.97	27,970.99	29,427.05	30,958.91
EBITDA	3,034	3,432	3,607	3,089	3,491	3,776.47	3,973.06	4,179.88	4,397.47	4,626.38
EBIT	2,451	2,821	2,935	2,416	2,829	3,047.22	3,205.85	3,372.73	3,548.30	3,733.01
Tax Rate	57.76%	22.23%	20.25%	23.48%	22.54%	29.25%	29.25%	29.25%	29.25%	29.25%
EBIAT	1,035.33	2,193.88	2,340.54	1,848.68	2,191.42	2,155.83	2,268.06	2,386.13	2,510.34	2,641.02
Depreciation	583	611	672	673	662	729.25	767.21	807.15	849.16	893.37
Accounts Receivable	-	-248	196	-150	-170	-328.24	-224.79	-236.49	-248.80	-261.76
Inventories	-	-593	273	61	-930	234.77	-214.48	-225.65	-237.39	-249.75
Accounts Payable	-	243	-288	286	201	115.59	163.28	171.78	180.72	190.13
Capital Expenditure	-587	-784	-775	-575	-786	-790.19	-831.33	-874.60	-920.13	-968.03
UFCF	1,031.33	1,422.88	2,418.54	2,143.68	1,168.42	2,117.01	1,927.94	2,028.30	2,133.89	2,244.97
WACC
PV UFCF						1,978.70	1,684.25	1,656.16	1,628.54	1,601.38
SUM PV UFCF										8,549.04

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	6.99
Free cash flow (t + 1)	2,289.87
Terminal Value	45,889.19
Present Value of Terminal Value	32,733.65

Intrinsic Value

Enterprise Value	41,282.69
Net Debt	1,567
Equity Value	39,715.69
Shares Outstanding	149
Equity Value Per Share	266.55