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CMI trades against a final fair-value range of $423.89-$651.97, with the midpoint set by the accepted valuation synthesis rather than earlier draft model outputs. Fair value range: low $424, high $652, with mid-point at $537.
Stock analysis

CMI fair value $424–$652

By StockMarketAgent.AI team· supervised by
Analyzed: 2026-05-13Next update: 2026-08-13Methodology v2.4Data cut-off: Quality gate: passSources: all material sources passed deterministic freshness/provenance gatesReview: automatedArchetype: Mature compounder
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Last price
$709.57
▼ -172.11 (-24.26%)
Fair value
$537
$424–$652
Rating
Reduce
confidence 81/100
Upside
-24.3%
upside to fair value
Margin of Safety
$456.84
MoS level · 15%
Market Cap
$97.9B
P/E fwd 21.4

§1 Executive summary

  • Composite fair value $537 with high case $652.
  • Implied downside of 24.3% to fair value.
  • Moat 9/10 · confidence 81/100 · Mature compounder.
  • Currently screens above fair value, so patience matters more than entry speed.
Fair value
$537
Margin of safety
-32.0%
Confidence
81/100
Moat
9/10

Educational analysis only — not financial advice. Always do your own due diligence.

$709.57Price
Low $423.89
Mid $537.46
High $651.97

CMI trades against a final fair-value range of $423.89-$651.97, with the midpoint set by the accepted valuation synthesis rather than earlier draft model outputs.

  • Cycle upside
    Near-term earnings momentum driven by operating leverage, robust legacy machinery replacement demand, and hybrid platforms bridging the technological gap safely.

§2 Bear case

A faster-than-expected global regulatory mandate for fully electric heavy-duty vehicles renders legacy engine intellectual property obsolete, stranding assets and severely depressing returns on invested capital before Accelera achieves scale.

Ways this thesis can break

Accelerated ICE Obsolescence

· High

Global emission regulations tighten faster than expected, stranding highly profitable legacy diesel assets and crashing near-term FCF.

FV impact
Drives valuation toward the $423.89 bear-case floor.
Trigger
24-36 months

Accelera Margin Failure

· Medium

The Accelera clean energy segment fails to reach structural profitability despite heavy capital expenditures, permanently diluting corporate ROIC.

FV impact
Reduces long-term multiple to <15x, wiping out growth premium.
Trigger
36-60 months

Cyclical Freight Recession

· Medium

A deep downturn in global freight and construction markets coincides with peak EV transition spending, squeezing liquidity and margins simultaneously.

FV impact
Compresses near-term EPS estimates by >20%.
Trigger
12-24 months
Early-warning signals to monitor
MetricCurrentTrigger threshold
Operating margins decline below 11.0% for two consecutive quarters.MonitorDeterioration versus the report thesis
Accelera segment revenue growth fails to outpace legacy ICE decay over a 12-month trailing period.MonitorDeterioration versus the report thesis
Capital expenditures structurally exceed historical norms as a percentage of revenue without corresponding ROIC stabilization.MonitorDeterioration versus the report thesis
Peer median P/E compresses to <20x, signaling broader industrial multiple contraction.MonitorDeterioration versus the report thesis
Free cash flow conversion drops materially due to elevated maintenance and transition capex.MonitorDeterioration versus the report thesis

§3 Financial history

Income statement — last six periods
Line itemT−0T−1T−2T−3T−4CAGR
Period2021-12-312022-12-312023-12-312024-12-312025-12-31Trend
Revenue—$28.07B$34.07B$34.10B$33.67B+4.6%
Gross profit—$6.72B$8.25B$8.44B$8.52B+6.1%
Operating income—$2.58B$1.28B$3.37B$3.87B+10.6%
Net income—$2.15B$735.0M$3.95B$2.84B+7.2%
EPS (diluted)$14.61$15.12$5.15$28.37$20.50+8.8%
EBITDA—$3.80B$3.03B$6.34B$5.40B+9.2%
R&D—$1.28B$1.50B$1.46B$1.40B+2.2%
SG&A—$2.69B$3.33B$3.28B$3.13B+3.8%

Quality scores

OCF / Net income
1.27×
>1 indicates high earnings quality
Accounting quality gate
Fail
Sector-adjusted gate
ROIC
16.6%
Return on invested capital
§3

Numbers analysis

Cash flow

Cash-flow quality is reflected in the OCFOperating cash flowCash generated from the company's core operations after working-capital changes but before capital expenditures. The first line of the cash-flow statement. / net incomeNet IncomeNet Income is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions., accounting-quality, and ROICROICReturn on invested capital. Operating profit (after tax) divided by invested capital. The single best gauge of capital-efficiency. Spread over WACC = economic value created. rows above.

Capital allocation

Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.

Individual subscribers — §4 onwards11 more sections

Read the full analysis — 11 more sections.

Competitive moat, industry cycle, peer comparison, intrinsic valuation, sensitivity, scenarios, earnings decision tree, position management, investor perspectives, scorecard, and final recommendation.

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SCENARIOS FAQ

CMI scenarios questions

  1. Each scenario for CMI (CMI) carries a five-year price target, an explicit set of assumptions (growth, terminal multiple, margin path), and a probability weight calibrated against current visibility.

FAQ

CMI — frequently asked questions

  1. Based on our latest analysis, CMI looks meaningfully overvalued. The current price is $710 versus a composite fair-value midpoint of $537 (range $424–$652), which implies roughly 24.3% downside to the midpoint.

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