Cummins 2025 Q3 Earnings Revenue Misses as Net Income Falls 33.7%

Cummins (CMI) reported third-quarter 2025 earnings, with revenue declining 1.6% to $8.32 billion and net income dropping 33.7% to $559 million. The results marked a mixed performance, with revenue surpassing the $8.06 billion consensus by 3.24% but earnings per share (EPS) falling 34.2% to $3.88.

Revenue

Cummins’ total revenue for Q3 2025 stood at $8.32 billion, reflecting a 1.6% year-over-year decline. While the company outperformed analyst expectations by $330 million, the drop stemmed from a 40% plunge in North American heavy and medium-duty truck demand. However, power systems sales rose 18% to $2.0 billion, driven by surging data center demand, and distribution revenue increased 7% to $3.2 billion. Components sales fell 15% to $2.3 billion, and engine sales declined 10.6% to $2.6 billion, offset by strong performance in global markets like China and India.

Earnings/Net Income

Net income for the quarter fell to $559 million, a 33.7% decline from $843 million in the prior-year period, with EPS dropping to $3.88 from $5.90. The earnings shortfall was exacerbated by $240 million in non-cash charges related to the electrolyzer business, driven by reduced government incentives for green hydrogen adoption. The EPS decline, representing a significant deterioration in profitability, underscores the challenges posed by sector headwinds and strategic adjustments.

Post-Earnings Price Action Review

The strategy of buying Cummins (CMI) shares upon a revenue beat and holding for 30 days showed favorable performance, supported by the company’s 3.24% revenue surprise and strong operational execution. Despite a 0.7% monthly gain in CMI shares, the stock slightly underperformed the S&P 500’s 1.3% rise, maintaining a Zacks Rank #3 (Hold). Financial stability, highlighted by an Altman Z-score of 4.24, and strategic focus on power generation and electrolyzer innovations position Cummins to navigate sector challenges. However, insider selling and volatile truck demand underscore the need for caution.

Additional News

1. Strategic Collaboration: Cummins announced a partnership with Komatsu to develop hybrid powertrains for mining equipment, aiming to accelerate decarbonization and reduce operational costs.

2. Product Innovation: The company unveiled a new 15-liter engine that demonstrated robust performance in a high-demand demonstration, emphasizing its heavy-duty capabilities and emissions benefits.

3. Dividend Announcement: Cummins declared a quarterly dividend of $2.00 per share, payable on December 4, 2025, to shareholders of record as of November 21. The payout ratio of 37.61% reflects a balanced approach to shareholder returns amid strategic reinvestment.

CEO Commentary

Jennifer Rumsey, CEO, emphasized resilience amid market headwinds, noting strong performance in Power Systems and Distribution despite declining truck demand. She highlighted strategic investments in electrolyzer technology and data center power solutions as growth drivers. Rumsey also addressed the impact of reduced government incentives on hydrogen adoption, stating the company is “reassessing its electrolyzer business to align with evolving market expectations.”

Guidance

Cummins did not provide explicit forward-looking revenue or profitability guidance for the remainder of 2025. However, CFO Mark Smith indicated that the Engine business faces ongoing challenges, including higher engineering costs and product transition complexities. Smith noted, “We hope we’re nearing the low point, but I wouldn’t expect a dramatic change in performance,” signaling cautious optimism for stabilization in the near term.

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