GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
Cummins looks cheap against its earnings, trading at 15x next year's estimate versus the roughly 19x industrial equipment makers usually get. Applying 19x to next year's forecast $34.58 a share, give or take 12%, puts fair value at about $578–736, with the $518.20 price 10% below the low end. The case leans on that forecast, with forward EPS 77% above trailing, and rests on valuation levels from reported earnings and estimates, not fundamental work. x.com
Caterpillar has stretched too far on valuation relative to its main peers, especially Cummins. United Rentals, despite less direct exposure to data centers, is still catching up on multiples. x.com
Caterpillar is cheap here, with plenty of free cash flow to keep funding capex for the next few years, a historic $64 billion backlog and newly raised targets. It has the best chart among key industrials, and the sector is seeing strong inflows this week. Jefferies set a $1,045 target this morning, and JPMorgan sees $1,165. x.com
Cummins is not a stock to own going into the kind of economic downturn that is expected, even as one side of a long Cummins, short Caterpillar pair trade that @GabrielNeo9 suggests. x.com
